continuing the journey
annual report 
and accounts 
2011 revenue
£4810m
operating profit
£479m
revenue
£5511m
operating profit
£901m
north america spain group
durham school services
stock transportation
our business in north america is 
focused solely on student transportation 
and operates in 30 us states and four 
canadian provinces
the business operates through medium
term contracts awarded by local school 
boards to provide safe and reliable 
transport for students and is the second 
largest private operator in north america 
alsa
our spanish business alsa operates 
long distance regional and urban bus  
and coach services across spain and  
in morocco
alsa was acquired by national express 
in 2005 and our position in spain was 
strengthened with the acquisition of 
continental auto in 2007  apart from its 
bus and coach services the business  
also operates service areas and other 
transportrelated businesses such as  
fuel distribution
national express 
the group operates in the uk spain  
and north america and during 201 1 
employed 40000 people and operated 
over 22000 vehicles
passengers made more than 650 million 
journeys on our services during the year
group revenue by market
spain 25 
north america 21
uk bus 12 
uk coach 12 
uk rail 30
spain 36 
north america 19
uk bus 13 
uk coach 14 
uk rail 18
group operating profit by market
for more details go to page 12 for more details go to page 16
overview 
national express at a glance
operating profit 
£m
298
10 369
11 479
revenue  
£m
46
10 4598
11 4810
operating profit 
£m
45
10 862
11 901
revenue  
£m
49
10 5256
11 5511 revenue
£2635m
operating profit
£327m
revenue
£2591m
operating profit
£349m
revenue
£6883m
operating profit
£434m
uk bus uk coach uk rail
national express west midlands
national express coventry
national express dundee
midland metro
national express is the market leader  
in the uk’s largest urban bus market 
outside of london we also run bus 
services in coventry and dundee we 
operate more than 1600 vehicles and 
cover over 70 million miles per year 
we operate the midland metro light  
rail service between birmingham  
and wolverhampton 
national express
eurolines
the kings ferry
national express is the largest operator  
of scheduled coach services in the uk 
the business operates high frequency 
services linking around 1000 destinations 
across the country 
we are the uk partner in the eurolines 
network which serves over 500 
destinations across europe and 
north africa
c2c
national express operates the industry
leading c2c franchise which serves london 
and south essex it is an important 
commuter route serving 25 stations on 
the line out of fenchurch street station 
london we ran national express east 
anglia until february 2012 
all profit and margin numbers unless otherwise stated 
refer to normalised results which can be found on 
the face of the group income statement in the first 
column the definition of normalised profit is as follows 
statutory result excluding profit or loss on the sale  
of business exceptional profit or loss on sale of non
current assets and charges for goodwill impairment 
intangible asset amortisation exceptional items and 
tax relief thereon for continuing operations the board 
believes that the normalised result gives a better 
indication of the underlying performance of the group 
operating margin the ratio of normalised operating 
profit to revenue for continuing businesses
for more details go to page 20 for more details go to page 24 for more details go to page 28
operating profit 
£m
155
10 283
11 327
revenue  
£m
22
10 2578
11 2635
operating profit 
£m
91
10 320
11 349
revenue  
£m
35
10 2503
11 2591
operating profit 
£m
284
10 338
11 434
revenue  
£m
80
10 6375
11 6883 who we are
national express group is a leading 
transport provider delivering services  
in the uk north america spain  
and morocco 
our vision 
is to earn the lifetime loyalty of our 
customers by consistently delivering 
frequent high performing public  
transport services which offer  
excellent value
contents
overview
an overview of national express group our 
key highlights and how we have performed 
this year
01 group highlights
02 chairman’s letter
business review
this section gives detail on our strategy and 
vision and how we have performed against 
this at group and divisional level
03 group chief executive
08 strategy
10 business model
12 spain
16 north america
20 uk bus
24 uk coach
28 uk rail
32 financial review
37 risks and risk management
40 living our values
governance 
our approach to corporate governance  
and how we have applied this in 2011 
44 chairman’s overview
46 board of directors
48 corporate governance
58 directors’ remuneration report
69 directors’ report
72 statutory information
74 directors’ responsibilities statement
financial statements
the audited financial statements of  
national express group for the year ended  
31 december 2011
75 auditor’s report
76 group income statement
77  group statement of comprehensive 
income 
78 group balance sheet
79  group statement of changes in equity
80  group statement of cash flows
81 notes to the consolidated accounts
137 auditor’s report
138 company balance sheet
139 notes to the company accounts
150 shareholder information
151  dividends and financial calendar
152 corporate information
153 glossary
157 five year summary revenue
£22380m
operating profit
£2252m
profit before tax
£1802m
operating margin
101
earnings per share
270p
dividend
95p
group
•	 record statutory profit before tax and 
amortisation of £1802 million 2010 £97 3m
•	 revenue growth of 53 to £22380 million 
2010 £21259m
•	 operating profit increased by 103  
to £2252 million 2010 £2042m
•	 revenue and profit growth in every division 
record profits in our uk coach business  
of £349 million
•	 industry leading operating margins in spain 
north america uk coach and rail – north 
america achieved 10 margin group margin 
has almost doubled since 2009
•	 passenger journeys rose by 54 million 
journeys to 6566 million
•	 strong balance sheet with longterm funding 
maturity gearing ratio further improved to 
19x 2010 21x
•	 return on capital before tax increased  
to 141 2010 132
•	 basic eps increased 144 to 27 0 pence 
2010 236p 203 pence delivered from 
nonrail earnings 2010 17 9p
•	 final dividend increased 83 to 65 pence
144
earnings per 
share p
10 236
11 270
583
dividend  
p
10 60
11 95
50bps
operating margin 

10 96
11 101
103
operating profit 
£m
10 2042
11 2252
123
profit before tax 
£m
10 1605
11 1802
53
revenue  
£m
10 21259
11 22380
1
overview  
group highlights
  overview
chairman’s letter
dear shareholder 
i am delighted to report that in 201 1 national express 
has delivered another successful year of business 
turnaround and improvement 
i am delighted to report that in 201 1 
national express has delivered another 
successful year of business turnaround 
and improvement we have now 
completed the process of recreating a 
high quality business building on the 
foundations that we put in place in 2010 
and delivering both improved profitability 
and strong revenue growth national 
express is now the best performing private 
provider of mass transportation in many  
of the markets in which it operates 
201 1 has been a record year for group 
statutory profit before tax and amortisation 
back in 2009 when i joined as chairman 
the group was struggling for its business 
survival however we reduced our debt 
resolved the losses in our east coast rail 
franchise maintained our independence 
and with strong shareholder support put 
in place an appropriate capital structure 
since his arrival in february 2010 dean 
finch has created a new leadership team 
which has turned the business around 
delivering effective operational control 
driving out excess cost and helping to 
refinance the group’s debt 201 1 has 
seen further margin improvement organic 
growth supported by acquisition and the 
identification of future growth opportunities 
2012 is likely to present difficult economic 
challenges but we have created a platform 
from which to grow both organically and 
through acquisition highlighted by our 
decision to acquire petermann partners 
inc which is due to complete during the 
first half of the year
with our turnaround complete we are 
now implementing the next stage of our 
strategy to continue to improve margin in 
our existing businesses to take advantage 
of the growth opportunities in our current 
markets and to identify and develop 
exciting new market potential it will be 
delivered by a management team that  
has proven credentials in every area of  
our operations and we will strengthen the 
team further to ensure that we have the 
skills to deliver each aspect of our strategy 
our vision for the group is to put our 
customers first to a level that will clearly 
differentiate national express in the mass 
transport market
during the first half of 201 1 the board 
took steps to further enhance its skills 
and experience particularly recognising 
the group’s future growth plans for north 
america and continental europe i was 
very pleased to welcome chris muntwyler 
joaquín ayuso and lee sander to the 
board each with credentials in our target 
markets since their appointment  
they have given valuable insight into  
these growth areas as well as helping  
to manage the risks and opportunities  
in our existing markets 
in recognition of the group’s sound 
financial footing and improved earnings 
we restored the dividend last year with 
a final payment for 2010 of 6 pence 
per share we set out a policy that the 
board considers both sustainable and 
progressive in this prolonged period of 
economic uncertainty – we will aim for our 
dividend to be at least two times covered 
by nonrail earnings and fully funded by our 
free cash flow across the medium term 
at the same time we reiterated our debt 
policy to target a gearing ratio of between 
two and two and a half times earnings 
before interest tax depreciation and 
amortisation ebitda 
we remain committed to these core 
policies which provide shareholders with 
a suitable balance of longterm growing 
returns whilst retaining sufficient resource 
in the group to explore opportunities to 
grow shareholder value following  
payment of our interim 201 1 dividend  
of 3 pence per share in september i am 
pleased to announce a recommended final 
dividend for 201 1 of 65 pence per share 
an increase of 83 taking the full year 
payment to 95 pence per share this will 
be paid from the 203 pence of nonrail 
earnings per share eps delivered in 201 1 
and the £844 million of free cash flow we 
generated in the year both of which we 
expect to grow in future years
during 201 1 our employees have 
continued to play a major part in the 
implementation of our strategy adopting 
our vision and values with particular 
focus on improvements to customer 
service and in the promotion of a culture 
of safety across the group on behalf of 
the board i would like to thank them for 
the commitment and enthusiasm that they 
have shown as we move into the next 
phase of our development
john devaney
chairman
29 february 2012
for more information on corporate 
governance and our board of directors 
please go to nationalexpressgroup
comar2011
john devaney
2 business review
group chief executive
overview of 2011
in 201 1 we completed our business 
recovery programme we delivered
•	 record statutory group profit before  
tax and amortisation of £1802 million 
2010 £973m
•	 threefold increase in statutory profit 
before tax up £892 million yearonyear 
to £1294 million
•	 revenue and profit growth in  
every division
•	 record profits in our uk coach business
•	 industry leading operating margins in 
spain north america uk coach and 
rail – north america achieved 10 
margin group margin has almost 
doubled since 2009 and
•	 end of year contract order book revenue 
of £37 billion in existing concessions 
and tendered contracts
strong increase in profit
group revenue increased by over 5 
to £22 billion despite the backdrop of 
difficult economic conditions and austerity 
measures normalised operating profit 
increased by 103 to £2252 million 
2010 £2042m and we achieved a record 
statutory group profit before tax and 
amortisation delivering no exceptional 
charges in 201 1 statutory profit before tax 
rose more than threefold to £1294 million 
2010 £402m 
secure financial platform
our basic earnings per share eps 
increased 144 to 27 0 pence 2010 
236p and we have increased our full year 
proposed dividend to 95 pence 2010 
60p this is an 83 increase in the final 
dividend we generated over £80 million 
in free cash flow in 201 1 supporting 
the reintroduction of the dividend and 
investment in organic growth to drive 
future profitability we maintained a strong 
financial platform with over £500 million of 
undrawn committed facilities and cash at 
the end of 201 1 a secure funding structure 
of primarily nonbank debt maturing 
between 2014 and 2020 and a debt 
gearing ratio below two times ebitda
successfully managing austerity 
during 201 1 we dealt effectively with 
the challenges of economic austerity in 
spain we saw little impact on our public 
concessions we saw some extension 
of receivable balances during the year 
and have managed them closely in 
north america we met the challenge 
of reduced state funding by delivering 
more outsourced conversion contracts 
to school board customers we are less 
exposed to uk government funding than 
many of our peers our uk and spanish 
coach businesses benefited by delivering 
excellent value for money services to  
cashstrapped customers economic 
austerity continues to drive as many 
opportunities for public passenger 
transport as it does challenges
core strengths in place to drive 
shareholder value
national express is now well positioned 
to capitalise on new value enhancing 
opportunities the executive management 
team is well established and the group 
has been restored to its position as a 
leading international operator of public 
transportation 
we are now focused on the following core 
initiatives to drive our progress
•	 delivering operational excellence 
with consistent service performance and 
ongoing cost efficiency improvements
•	 securing organic growth from our 
existing portfolio of businesses and 
•	 developing new contract 
opportunities in targeted businesses 
and geographies
i believe our portfolio of 
businesses and track 
record of success mean 
we are also well placed 
to target emerging 
growth opportunities
dean finch
in just two years national express has moved from 
reporting losses to the record profits we have announced 
for 201 1 we carried more passengers than in 2010 and are 
now the best performing operator in many of our markets 
building on our operational success over 
the last two years with four of our divisions 
delivering industry leading margins there 
are still many opportunities to further 
reduce costs and improve efficiencies 
our existing diversified portfolio of bus and 
coach businesses has excellent growth 
potential and we are well on the way to 
replacing earnings from the east anglia 
rail franchise organically we will grow 
through new products better marketing 
and improved service delivery at the same 
time we are investing in new business 
opportunities – such as the acquisition 
of the petermann school bus business in 
north america the group is also investing 
in commercial development teams to 
target exciting us and european markets
delivering our strategy in 2011
last february i set out the first phase 
of our strategy which was to complete 
the rebuilding of national express and to 
establish a foundation for profitable and 
sustainable longterm growth in 201 1  
i believe we have achieved this – not only 
have all five group businesses reported 
3
business review  
group chief executive business review
group chief executive continued
increased profits with four at industry 
leading margins but all have achieved 
profitable revenue growth 
achieving margin improvement
over the last two years we have delivered 
significant improvement in every business 
uk bus and north america have both 
nearly doubled profit since 2009 and have 
increased operating margins over the  
two years – uk bus achieved a margin  
of 124 in 201 1 and north america 
100 in 201 1 uk coach delivered  
a record profit and a 135 margin uk  
rail margin rose from 53 to 63 –  
a very strong performance in this high 
revenue low capital business spain’s 
margin has remained stable at an industry 
leading 164
this has been achieved through a clear 
focus on operational performance 
and delivering an efficient cost base 
with new management teams in north 
america uk bus and uk coach as well 
as new leadership in uk rail we have 
delivered cost efficiency savings removed 
unprofitable mileage secured global 
procurement savings and ensured that 
capacity has adapted to meet demand 
in north america alone as promised 
we have delivered us40 million of cost 
savings over two years
delivering organic growth
we have complemented margin 
improvement by increasing organic  
growth every division has grown revenue 
in 201 1 either in line with or outperforming 
industry peers with overall group 
revenue up 5 yearonyear uk bus saw 
passenger revenue up 3 uk coach 
grew passenger revenue on the core 
national express network by 5 spain 
grew passenger revenue by 6 and  
north america revenue was 8 higher 
fares have been rebalanced – in uk 
bus the average passenger yield has 
been improved yet our west midlands 
fares remain amongst the lowest for 
comparable conurbations offering 
excellent valueformoney uk coach 
eliminated heavily discounted promotional 
fares in favour of everyday value pricing 
in its regulated business alsa adapted 
fares and services to market conditions 
overall we continue to deliver great value 
to our customers and are focused on 
driving greater volume growth with some 
customers switching from other high cost 
modes of transport such as rail
we have seen passenger volume growth in 
response to service improvements in both 
the uk bus and coach operations more 
effective marketing strategies have targeted 
student travel in bus coach and rail 
together with commuter travel in coach 
we are investing heavily in new fleet having 
spent £132 million across the group in 
201 1 in uk bus we will have introduced 
over 250 new buses onto the network 
over a 12month period along with 160 
new vehicles introduced to our thirdparty 
operated uk coach fleet in 201 1 and 300 
new vehicles in spain in north america  
we added over 600 new school buses 
in 201 1 and cascaded over 900 existing 
buses across the fleet driving better  
capital efficiency 
securing targeted expansion
during 201 1 we have begun to secure 
targeted expansion adding revenue  
across the group through contract wins 
and bolton acquisitions this leverages  
the group’s strong market positions  
and proven expertise in winning new 
contracts to deliver sustainable revenue 
and profit growth 
the group has an existing ‘order book’ 
of £37 billion in its contract businesses 
across north american school bus spain 
and uk rail this represents over three 
years of contracted and concessionbased 
revenues for the group six years in spain 
two years in north america and one year in 
rail franchising delivering a 98 retention 
rate in existing school bus contracts 
north america also secured 1000 
new routes in 201 1 the conversion of 
contracts to outsourcing is an increasingly 
important part of north america’s growth 
reflecting lower capital requirements and 
opportunities to tailor a specific service 
package to the new customer in 201 1 
we secured ten conversion contracts 
and integrated the vogel business in 
new jersey a bolton acquisition that 
consolidated our position and efficiencies 
in the local market
in spain alsa won the tender to operate 
the madrid city tour service and added  
a further concession in agadir two  
small acquisitions were made creating  
a foothold in a new territory navarre and 
adding a further concession in the south  
of spain contracts and opportunities  
such as these provide profitable revenue 
growth to complement and enhance the 
core transport operations at alsa
for more information on  
our vision and values go to  
nationalexpressgroupcomourway
carlos chiesa  
painter and coachbuilder  
alsa
carlos chiesa works as a painter 
and coachbuilder in alsa’s 
central depot in madrid both 
jobs can pose health hazards 
ever since he joined alsa in 1991 
carlos has been aware of the 
importance of safety in his daily 
routine and has always made 
sure that he uses the proper 
safety equipment as a result  
he has never had an accident
4 growth through larger scale acquisition is 
also considered against specific criteria –  
in the same or similar modes of transport 
in overlapping geographies where scale 
gives immediate synergies and only 
where clear financial criteria will be met 
in september 201 1 we announced the 
acquisition of petermann a school bus 
business in the united states that met 
these criteria with a strong reputation 
for customer service a very experienced 
management team annual revenue 
of around us150 million and annual 
operating profit of us135 million 
petermann is a high quality business 
strong synergies will complement the 
geographic coverage it adds to our 
durham bus operation whilst adding 
a contract in our targeted paratransit 
market the acquisition is expected to 
complete during the first half of the year
looking forward –  
key investment areas
our vision set out at the start of 201 1 is  
to earn the lifetime loyalty of our customers 
by consistently delivering frequent high 
performing public transport services 
which offer excellent value during the last 
12 months we have strengthened our core 
values to deliver this vision in addition  
to improving the social environmental  
and economic conditions of the 
communities in which we operate these 
values will deliver three differentiating 
areas for national express – safety 
leadership customer service and people 
development particularly in commercial 
development expertise
safety
more than anything else we value the 
safety of our customers and employees 
last year we launched our driving out 
harm programme across the group a 
comprehensive five year plan to upgrade 
our entire safety management approach 
we have adopted 12 global safety 
standards including setting enhanced 
requirements for vehicle safety all senior 
managers have completed formal safety 
training and comprehensive driver 
safety management has retrained poorly 
performing drivers and implemented 
defensive driving techniques with 
significant improvement in our marrakesh 
operation and uk bus and coach leading 
the industry in low accident rates we are 
targeting a 70 reduction in lost time 
injuries and a 50 reduction in vehicle 
accidents over five years
customers
we place customers at the heart of 
our business and our goal is to be the 
customer service leader in the mass 
transport sector with a new group 
customer service director in place we  
are investing in our front line station staff 
our contact centres and our drivers in 
2012 we have launched ‘master drivers’   
a programme embedding advanced 
driving skills these factors will help 
differentiate national express in delivering 
our customer experience 
people
our employees are core to enabling 
national express to consistently deliver 
high performing services of which we 
can be proud with a highly experienced 
executive team established in 2010 this 
year saw the introduction of global hr 
standards talent development and a new 
performance management scheme with 
clearer accountabilities responsibilities and 
pay for performance we are significantly 
strengthening employee engagement 
education and capability development 
and innovation we are investing to drive 
our commercial business development 
capability – in rail where we have 
assembled a small team of experienced 
industry experts to secure new profitable 
franchises in north america where we 
will drive new transit opportunities and in 
continental europe in selected bus and 
coach markets
developing mass transport markets
we believe public transport has a positive 
future social environmental and economic 
trends will mean its core strengths 
will increasingly become competitive 
advantages we believe public transport  
is distinguished by four crucial cs
•	 cost at a time when household  
budgets are increasingly pressured  
the value offered by public transport  
is increasingly attractive
•	 convenience in addition to its 
traditional strengths the ability to 
work on the move – increasingly using 
smartphone and similar technology 
– builds on the convenience public 
transport offers
•	 congestion congestion will continue 
to pose a challenge to policymakers 
and the public for years to come 
strengthening the case for investment  
in public transport and
our vision 
to earn the lifetime 
loyalty of our customers  
by consistently 
delivering frequent 
high performing public 
transport services which 
offer excellent value 
our values 
safety
more than anything else 
we value the safety of our 
customers employees and the 
public generally
customers 
we will place customers at 
the heart of our business 
nobody will try harder for our 
customers than we do 
people 
enabling all our people to  
reach their full potential and to 
give their best as individuals 
and in teams
community 
we will advance the social 
environmental and economic 
conditions in the communities 
where we operate
5
business review  
group chief executive business review
group chief executive continued
•	 carbon public transport already has a 
significant carbon advantage over private 
and air transport with the adoption of 
new technologies further reducing its 
carbon footprint
strength of the national  
express portfolio 
national express is now well positioned for 
the future as a distinctive mass transport 
contractor its combination of geographic 
presence and passenger transportation 
expertise will deliver longterm sustainable 
growth in markets with good potential  
our portfolio of perpetuity owned 
businesses – uk bus and coach –  
and strong contract operations – north 
america spain and uk rail – provides 
an excellent platform for future value 
generation this platform reflects
•	 the strength of our core existing bus 
and coach businesses – a unique 
geographically diversified group with  
a balanced requirement for capital
•	 demonstrable resilience in business 
performance despite the economic 
challenges – significantly less  
uncertainty in spain proven by results 
in both businesses growth in north 
america and plans in place to mitigate 
uk austerity
•	 flexibility to adjust to stretched public  
and consumer budgets whilst providing 
a core public service
•	 rail opportunities with limited downside 
in existing profits and cash flows 
compared with peers
•	 a stable financial structure – substantial 
longterm committed debt funding 
primarily sourced from nonbank markets
•	 substantial ‘selfhelp’ opportunities 
to drive further margin improvement 
including in uk bus and north america
•	 market leading positions offering good 
organic growth potential and
•	 significant market opportunities 
– mandated continental europe 
deregulation us development into 
transit and paratransit leveraging 
existing strong capabilities and 
management experience
next steps in delivering the strategy
the next phase of the group’s strategy will 
see implementation of the following steps
•	 delivering operational excellence in our 
existing businesses to drive continued 
margin progress
•	 securing organic growth opportunities 
in existing businesses and
•	 developing new contract opportunities  
in targeted markets
delivering operational excellence  
in our existing businesses
we will continue to focus on opportunities 
to enhance margins and profitability in 
the four core bus and coach divisions 
leveraging our international portfolio 
and scale procurement savings worth 
over £12 million yearonyear in 201 1 
will continue to bring benefits in uk 
bus we are targeting to further increase 
margin through improved costs depot 
improvements and growth in north 
american school bus already the industry 
leader in margin further improvements 
will be delivered through improved 
maintenance schemes and the use of 
technology gps is already delivering 
better control of wage and fuel costs 
spain and uk coach are focused on 
minimising the impact on 2012 margins of 
concession renewal and subsidy reduction 
respectively each business will continue to 
deliver cost savings and productivity gains 
while keeping networks optimised 
securing organic growth opportunities 
organic growth is a key target for each 
business austerity will continue to drive 
value services such as bus and coach  
in north america the school bus business 
presents significant opportunities to 
maintain our recent rate of winning market 
share converting outsource tenders and 
selective market consolidation the school 
bus market of 530000 vehicles remains 
little over one third outsourced and there 
are 4000 participants in the market  
few of whom have the resources to 
compete nationally
alsa will continue to explore domestic 
market opportunities in concession and 
contract bids together with selected 
consolidation opportunities morocco 
remains an exciting market as other major 
cities look to modernise their urban bus 
operations following alsa’s success in 
marrakesh and agadir uk coach will 
continue to exploit the growth potential 
for more information on our portfolio go to  
nationalexpressgroupcomaboutus
renate carrington driver 
durham school services
when renate carrington started 
driving a school bus jimmy 
carter was challenging gerald 
ford for the us presidency and 
apple was a startup that was 
1976 at the time she was driving 
for the school board in lewisville 
near dallas texas when durham 
won the contract in 1988 she 
came to us – and she’s stayed 
ever since that’s 35 years of 
serving her community
6 from modal shift away from higher rail  
ticket pricing
we are also investing in technology that will 
make it easier for our customers to access 
our services and so increase travel the 
uk coach business now has realtime 
fleet location data which is being used to 
improve customer information and vehicle 
routing uk bus is trialling smart card 
technology across its fleet to improve  
ease of customer use 
developing new contract opportunities 
in targeted markets
the group is building strong commercial 
development teams to develop a small 
number of target markets the group has 
identified selected markets in europe and 
north america representing £60 billion of 
annual addressable revenue the majority 
of those opportunities are in the contract 
transport market where the group can 
utilise and further develop its contract 
bidding and concession management 
capabilities we will focus on new markets 
in north america and deregulating markets 
in continental europe
•	 in north america we now have 
access to profitable additional markets 
including transit and paratransit this is 
a us5 billion market with low capital 
requirements complementary to the 
contract expertise we have in school 
bus the senior citizen population in the 
us is expected to double by 2040 with 
disabled ridership also increasing with 
the petermann acquisition our plans 
are well developed to target a greater 
presence in this market
•	 in continental europe we are well 
placed to meet the needs of a market 
deregulating under eu rules as europe’s 
leading scheduled coach operator 
we will seek to leverage our proven 
skills and capability along with the 
national express alsa and eurolines 
brands we will also explore bus and 
rail opportunities that meet our rigorous 
investment criteria and
•	 in rail we retain our expertise and 
knowledge alongside our industry
leading c2c franchise winner of 
‘suburban and metro operator’ for the 
last two years franchises have attractive 
characteristics providing a stable cash 
flow and strong capital return as long 
as the risk is acceptable we have 
assembled a team of experienced rail 
professionals to lead our work we have 
already secured four star accreditation 
under the european foundation 
for quality management efqm 
assessment for c2c we are seeking to 
prequalify in the current round of uk rail 
franchise tenders with around £6 billion 
of revenue to be tendered over the next 
four years
outlook for 2012
we operate in markets that combine 
to offer longterm growth strong cash 
generation and scope to generate good 
returns for shareholders through dividends 
capital return and reinvestment for growth 
our core business of international bus  
and coach services is robust sustainable 
and defensible 
a discounted travel scheme alongside the 
introduction of new services in uk coach 
investment to stimulate passenger growth 
in uk bus and the integration of targeted 
acquisition opportunities are all expected 
to drive profitability this will help to mitigate 
the reduction in concession income in 
uk coach and a lower rail profit following 
the handover of the east anglia franchise 
alsa has an excellent track record of 
contract retention and is well positioned 
to renew upcoming intercity concessions 
over the next 18 months and to develop 
new opportunities in both spain and 
morocco in north america we expect 
economic constraints to continue to lead 
school boards towards outsourcing whilst 
the integration of the petermann acquisition  
will drive profit growth and synergies 
finally future participation in uk rail  
may offer additional upside opportunity  
for the group
following a strong end to 201 1 we expect 
passenger revenue to continue to grow 
in each of our bus and coach divisions 
in 2012 as austerity measures fuel and 
fare increases make passenger travel by 
other modes relatively more expensive 
national express provides attractive value 
for money alternatives we believe that 
our portfolio of businesses will provide 
sustainable earnings growth continued 
cash generation and exciting opportunities 
for growth in selected markets in the 
medium term
dean finch
group chief executive 
29 february 2012
sue gibbs station announcer  
c2c
fenchurch street station links 
south essex to the city of london 
around 30000 customers use it 
every day “but over the years you 
get to know them and they know 
you” says station announcer sue 
gibbs sue who was recently 
awarded an mbe for her work is 
known as the ‘voice of fenchurch 
street’ and is proud of the fact 
that “we have no recorded 
announcements here” 
7
business review  
group chief executive strategy
generating shareholder value
1 
margin improvement
over the last two years we have substantially improved  
our underperforming businesses and maintained our  
bestinclass margins in other divisions
2 
organic growth 
we are driving our businesses to grow organically  
every division has grown revenue in 201 1
national express has achieved its strategic objectives of delivering margin 
and organic revenue growth and established a platform for profitable and 
sustainable longterm growth
3 
opportunities ahead
our goal is to deliver growth based on  
our core competence of consistently 
delivering frequent high performing  
mass public transport services which  
offer excellent value 
delivering operational 
excellence in our existing 
businesses to drive 
continued margin progress
•	uk bus – further margin improvement
•	north america school bus – further 
margin improvement
•	spain – minimise impact of  
concession renewal
•	uk coach – minimise impact  
of subsidy removal
8 09 140
10 164
11 164
margin 
spain
09 07
10 00
11 37
underlying revenue growth 
spain
09 141
10 128
11 135
margin 
uk coach
09 07
10 30
11 35
underlying revenue growth 
uk coach
09 71
10 110
11 124
margin 
uk bus
09 02
10 00
11 22
underlying revenue growth 
uk bus
09 57
10 80
11 100
margin 
north america
09 07
10 25
11 84
underlying revenue growth 
north america
09 10
10 53
11 63
margin 
uk rail
09 42
10 24
11 81
underlying revenue growth 
uk rail
securing organic growth 
opportunities in existing 
businesses
•	north america – winning market share and 
converting outsource tenders
•	spain – domestic concession and contract 
wins new cities and expanding services  
in morocco
•	uk coach – modal shift away from 
increasingly expensive rail tickets
•	uk bus – investment in smartcard technology 
to improve customer ease of use
developing new contract 
opportunities in targeted 
markets
•	north america – accessing the us5 billion 
transit and paratransit markets
•	continental europe – deregulating 
european markets with coach and rail 
opportunities
•	rail – uk rail refranchising market worth  
£6 billion of annual revenues in next  
four years
key focus divisions bestinclass  
divisions
9
business review 
strategy ––
business model
a strategic roadmap
our portfolio of businesses provides an excellent platform for future value generation
spain north america uk bus uk coach uk rail
mode
urban bus intercity coach school bus urban bus intercity coach commuter rail
operating model
concession longterm contract mediumterm perpetuity owned business perpetuity owned business franchise longterm
market regulation
lightly regulated largely unregulated unregulated unregulated highly regulated
market share
20
of the intercity regional and outsourced 
urban contract market
10
of the outsourced school bus market
80
of the west midlands bus market
60
of the uk scheduled coach market
10
of the uk rail franchise market
return on capital
strong acceptable improving strong strong capital light strong capital light
current opportunities
continued growth in both  
businesses
revenue margin and return  
on capital growth 
passenger volume and further 
margin growth
organic revenue growth manage franchises  
participate in franchise bids
business model
alsa is the largest private operator of buses 
and coaches in spain where public transport 
is seen as an essential public service its 
markets are regulated and supported by 
longterm concession agreements provided 
in exchange for public service obligations 
concessions are operated exclusively with 
competition at point of tender concessions 
typically run for 10 to 15 years alsa ’s 
portfolio provides a balance between
•	 long distance coach operations which 
receive no subsidy and take revenue risk 
in return for flexibility over the number 
of services operated and a regulated 
maximum fare 
•	 regional coach operations which may 
be subsidised by the autonomous 
governments and 
•	 urban bus operations operated under 
programme contracts with city councils 
and transport consortia 
daytoday competition is primarily 
intermodal ie rail low cost airlines  
and the car
the group’s operations are carried out by 
our subsidiaries durham school services 
us and stock transportation canada 
we are the second largest private operator 
the outsourced private operator market 
is only around one third of the total with 
the remainder being insourced that is 
owned and run by the school boards 
themselves contracts typically run for 
five years and contract retention is high 
once secured contracts have very low 
revenue risk over the contract life scale is 
beneficial – economies can be achieved 
through procurement centralisation of 
administration and business development 
access to capital is key most new 
contracts require investment in new buses 
and asset utilisation is low due to the part 
time usage of these specialised vehicles
national express west midlands is the 
market leader in the largest single urban 
network in the uk deregulated market the 
deregulated model allows for total flexibility 
in both fares and service the business 
has a high regional market share with 
strong competition from multiple operators 
on specific routes modal competition 
is principally from private cars revenue 
and profitability are driven by the scale 
of operations delivering frequent reliable 
and affordable services across a broad 
network utilising a high quality fleet 
‘national express’ is the national coach 
network operator in the uk offering 
great value and accessible travel to all it 
operates the only scheduled national uk 
coach network and the largest in europe 
running 500 coaches a day serving over 
1000 domestic destinations built on a 
flexible outsourced business model where 
third party providers supply 80 of the 
coaches and responsibility for sales lies 
with the company with 70 unprompted 
brand recognition the business benefits 
from its integrated network and scale 
offering breadth and interconnectivity 
where competitors offer only pointtopoint 
services with limited infrastructure
national express has a strong operational 
skills base in uk rail one of the only 
privatised systems in europe the uk rail 
industry comprises franchises awarded 
on an exclusive operation basis to private 
operators prices are predominantly 
regulated and costs are substantially fixed 
around track access rolling stock and 
franchise payments the group ran two 
franchises in 201 1 operating as national 
express east anglia and c2c running until 
february 2012 and may 2013 respectively
risks to manage in 2012
concession rebidding school board funding uk government funding bsog uk government funding csog franchise terms and bidding
10 ––
for more information on our  
performance please go to 
nationalexpressgroupcominvestors
spain north america uk bus uk coach uk rail
mode
urban bus intercity coach school bus urban bus intercity coach commuter rail
operating model
concession longterm contract mediumterm perpetuity owned business perpetuity owned business franchise longterm
market regulation
lightly regulated largely unregulated unregulated unregulated highly regulated
market share
20
of the intercity regional and outsourced 
urban contract market
10
of the outsourced school bus market
80
of the west midlands bus market
60
of the uk scheduled coach market
10
of the uk rail franchise market
return on capital
strong acceptable improving strong strong capital light strong capital light
current opportunities
continued growth in both  
businesses
revenue margin and return  
on capital growth 
passenger volume and further 
margin growth
organic revenue growth manage franchises  
participate in franchise bids
business model
alsa is the largest private operator of buses 
and coaches in spain where public transport 
is seen as an essential public service its 
markets are regulated and supported by 
longterm concession agreements provided 
in exchange for public service obligations 
concessions are operated exclusively with 
competition at point of tender concessions 
typically run for 10 to 15 years alsa ’s 
portfolio provides a balance between
•	 long distance coach operations which 
receive no subsidy and take revenue risk 
in return for flexibility over the number 
of services operated and a regulated 
maximum fare 
•	 regional coach operations which may 
be subsidised by the autonomous 
governments and 
•	 urban bus operations operated under 
programme contracts with city councils 
and transport consortia 
daytoday competition is primarily 
intermodal ie rail low cost airlines  
and the car
the group’s operations are carried out by 
our subsidiaries durham school services 
us and stock transportation canada 
we are the second largest private operator 
the outsourced private operator market 
is only around one third of the total with 
the remainder being insourced that is 
owned and run by the school boards 
themselves contracts typically run for 
five years and contract retention is high 
once secured contracts have very low 
revenue risk over the contract life scale is 
beneficial – economies can be achieved 
through procurement centralisation of 
administration and business development 
access to capital is key most new 
contracts require investment in new buses 
and asset utilisation is low due to the part 
time usage of these specialised vehicles
national express west midlands is the 
market leader in the largest single urban 
network in the uk deregulated market the 
deregulated model allows for total flexibility 
in both fares and service the business 
has a high regional market share with 
strong competition from multiple operators 
on specific routes modal competition 
is principally from private cars revenue 
and profitability are driven by the scale 
of operations delivering frequent reliable 
and affordable services across a broad 
network utilising a high quality fleet 
‘national express’ is the national coach 
network operator in the uk offering 
great value and accessible travel to all it 
operates the only scheduled national uk 
coach network and the largest in europe 
running 500 coaches a day serving over 
1000 domestic destinations built on a 
flexible outsourced business model where 
third party providers supply 80 of the 
coaches and responsibility for sales lies 
with the company with 70 unprompted 
brand recognition the business benefits 
from its integrated network and scale 
offering breadth and interconnectivity 
where competitors offer only pointtopoint 
services with limited infrastructure
national express has a strong operational 
skills base in uk rail one of the only 
privatised systems in europe the uk rail 
industry comprises franchises awarded 
on an exclusive operation basis to private 
operators prices are predominantly 
regulated and costs are substantially fixed 
around track access rolling stock and 
franchise payments the group ran two 
franchises in 201 1 operating as national 
express east anglia and c2c running until 
february 2012 and may 2013 respectively
risks to manage in 2012
concession rebidding school board funding uk government funding bsog uk government funding csog franchise terms and bidding
11
business review 
business model business review
spain
javier carbajo 
ceo alsa
my key objective over the next two years is 
to renew the intercity concessions due for 
retendering given market trends in our existing 
intercity and urban businesses we can deliver 
robust growth whilst developing exciting growth 
opportunities in morocco and new territories
revenue
£5511m
operating profit
£901m
financial kpis nonfinancial kpis
passengers  
numbers 
m
mileage  
m
revenue per km 
€
margin

revenue growth 

98
34
20
10 164
11 164
10 1643
11 1699
10 1889
11 2075
10 00
11 37
10 175
11 179
divisional kpis
we measure our progress against our strategy and goals 
using the following kpis
 local currency
 regular passenger services
12 201 1 was another successful year for 
alsa delivering both revenue and profit 
growth the excellent value offered by our 
urban bus and intercity coach services 
continues to meet the growing needs 
of customers providing a high quality 
transport service with fares that suit the 
domestic economic conditions long
term concessions alsa’s marketleading 
position and a flexible cost base provide 
both a resilient platform and opportunities 
for expansion reflecting our confidence  
in the future we continue to invest in  
fleet renewal and growth in both spain  
and morocco
overall revenue growth for the division in 
local currency was 37 49 in sterling 
terms delivering €6354 million 2010 
€6127m in total revenue 35 more 
kilometres were operated than in 2010 as 
alsa increased supply to meet passenger 
demand growth remained consistent 
throughout the year supported by the  
new agadir contract in morocco
operating profit increased by 34 to 
€1039 million 2010 €1005m operating 
margin was maintained at 164 growth 
and efficiency in the transport business 
including a strong performance in 
morocco event services and international 
offset reduced profitability in the peripheral 
nontransport businesses primarily the 
fuel distribution and motorway service 
businesses which represent only 8  
of alsa’s total revenue
market overview
market size
€35bn
regulated bus and intercity  
coach market 
concessions
185
alsa has 162 intercity coach 
concessions 22 urban bus contracts 
and one other concession
 intercity coach concessions  
 urban bus contracts 
 other concession
market composition
alsa has the leading position in a highly 
fragmented market
market trends
modest passenger growth in coach 
reversing recent trends in public 
transport resilient urban bus demand
market features
regulated and highly segmented 
market with three levels of government 
regulation central long distance coach 
regional regional coach and city urban 
bus each concession is exclusive to 
the operator based on compliance with 
the public service obligation flexibility 
required to meet changing demand
customers
urban all ages work and study multiple 
trips per week
intercity mostly young people few trips 
per year for leisure visiting family on 
regional services also work and study
competition
intercity competition from statebacked 
rail now operating under reduced 
subsidy and low cost airlines bus and 
coach concessions are awarded through 
competitive public tender typically every 
ten years
labour
traditionally less flexible labour market 
reflecting domestic practice
revenue for alsa spain was £551 1 million 
2010 £5256m and normalised operating profit was 
£90 1 million 2010 £862m in local currency revenue 
was €6354 million 2010 €6127m and normalised 
operating profit was €1039 million 2010 €1005m
13
business review 
spain business review
spain continued
cash management continued to be 
strong a planned increase in working 
capital reflected repayment of deferred 
social security in addition in light of public 
funding issues alsa has also managed 
outstanding receivables balances carefully 
to ensure timely collection a key part of 
our business is the provision of contracts 
with various public bodies primarily urban 
bus operations where we do not take 
demand risk in the operation of routes  
at the end of 201 1 alsa’s receivable 
balance from public bodies was €57 5 
million 2010 €446m this increase 
primarily related to a single customer with 
which a new legally enforceable payment 
plan was agreed in december 201 1 in 
addition the national governing party has 
confirmed that all public debts will be paid 
with the state now providing credit funding 
to public bodies
delivering organic growth
the alsa business provides a stable 
platform of longterm contracts and 
concessions together with opportunities 
for growth within both spain and 
morocco both intercity coach and urban 
bus operations delivered revenue and 
passenger growth in 201 1 revenue 
growth of 6 in intercity services 
reflected gains in both scheduled and 
tourist services driven by an increase in 
passenger numbers of 1 and increased 
regulated prices a strong summer period 
reflecting increased domestic vacationing 
was followed by continued robust growth 
through the remainder of the year growth 
was strong across all geographic areas 
with particularly strong trends on madrid 
routes and in northern spain 
the intercity coach business is becoming 
the preferred option for passengers in the 
current economic climate where public 
subsidies to stateowned rail operators 
have decreased and where airline activity 
on competing routes has reduced 
consequently alsa has continued its 
investment in new coaches ahead of 
concession renewal later in 2012 and 2013 
with an average coach fleet age of three 
years on the core network the business 
is also adding more high quality ‘supra’ 
services with better yields and is investing 
in webbased and mobile technology to 
attract new customers to the network
the urban bus business grew strongly in 
201 1 driven by expansion in morocco 
with a full year benefit from the agadir 
contract which started in september 
2010 moroccan annual revenue now 
exceeds €25 million and further growth 
is planned urban kilometres operated in 
spain remained steady in 201 1 bus travel 
remains fundamental to mobility in spanish 
cities and alsa is well positioned in its 
concessional contracts 
iván gozalo driver 
alsa
since 2007 iván gozalo has 
worked as a bus driver in the 
madrid suburb of torrejón 
de ardoz he is good with 
passengers and he knows that 
the addition of new hybrid buses 
to the fleet will improve torrejón’s 
environment he thinks this is 
good for the community good for 
the city and it’s good for iván too 
because that is where he lives
for more information on our spanish 
business please go to alsaes
14 adela lupascu stewardess  
alsa
no two customers are the same 
especially on the madrid city tour 
bus where adela lupascu is a 
stewardess “every day i get to meet 
people from all over the world who 
are visiting spain” they all have 
different needs adela says but 
making sure they are comfortable 
– and satisfied – is what her job is 
about “and that is what i enjoy”
alsa continues to adjust costs and 
improve operational efficiencies to offset 
inflation the coach operation is highly 
flexible and increases in demand were  
met in 201 1 by increasing contracting  
with partner operators allowing resources 
to be optimised 
securing targeted expansion
new contracts and bolt on acquisitions 
also contributed towards divisional growth 
in september alsa started operating the 
madrid city tour sightseeing bus contract 
replacing the madrid barajas airport 
contract other bolton additions included 
an extension of the agadir concession 
an investment that allows the business 
to reinforce its position in navarre and 
the basque country and an additional 
concession in southern spain
outlook for the future
future prospects for the alsa coach and 
bus operations remain robust as the value 
and quality in the nature of the services 
we provide are well positioned for times of 
economic uncertainty we are focused on 
revenue growth contract retention and new 
opportunities including in morocco 
we are targeting growth in the intercity 
business on existing routes and through 
new tourist services coach performance 
is expected to benefit from increased 
occupancy at current fares arising from 
reduced capacity in low cost airlines on 
overlapping routes and ongoing reduction 
of public funding in rail we will continue 
to work closely with our urban customers 
to adapt to changing bus needs whilst 
retaining the economic value of our 
contracts alsa has the proven capability 
to manage change and new opportunities
alsa is focused on securing its concession 
renewals with a forward revenue order 
book of €3 1 billion during 2012 currently 
operated intercity concessions representing 
9 of annual revenue are due for tender 
alongside other operators’ concessions 
the framework for national tenders was 
agreed by the ministry of transport in 201 1 
favouring operators who have delivered an 
excellent performance and compliance with 
concession conditions 
additional opportunities for growth utilising 
alsa’s expertise scale and reputation 
will be developed morocco will remain 
a focus with potential for additional city 
contracts and alsa will seek to continue 
to build on recent success in tourist 
and new intercity services in february 
2012 alsa and iberia launched an 
integrated ‘bus  fly’ programme to 
create intermodal transport from five cities 
connecting through madrid a first for the 
international travel industry leveraging the 
group’s international experience alsa 
will also support the uk in expanding 
coach operations as markets open across 
continental europe including building on 
the existing successful eurolines operation
business review 
spain
15 business review
north america
revenue
£4810m
normalised operating profit
£479m
david duke 
ceo national express corporation
the north american school bus contract market 
represents an attractive opportunity further margin 
improvement remains a continued focus but the 
exciting challenge is delivering valueenhancing 
growth i base our approach on the abc of the industry 
– acquisitions bidding and conversion – whilst 
ensuring that we remain proactive and responsive  
to our customers and employees
10 80
11 100
10 131
11 160
10 14371
11 15292
10 25
11 84
10 90
11 98
10 184
11 122
financial kpis nonfinancial kpis
routes operated retention rate 

spares ratio 

margin

return on net 
tangible assets

revenue growth 

64
divisional kpis
we measure our progress against our strategy and goals 
by using the following kpis
 local currency
16 16 market overview
in 201 1 the north american operations 
delivered strong revenue growth and 
achieved a 10 operating margin the 
business recovery programme was 
completed with annualised savings of 
us40 million delivered over the last two 
years the division is now the industry 
leader in delivering profitability and growth 
in school bus and is well placed to secure 
further revenue and margin growth it 
is established as a platform for further 
consolidation in the school bus market – 
with its lower risk highly contracted  
nature – and expansion into adjacent 
capitallight markets
revenue in local currency grew by 8 
to us7722 million 2010 us712 1m 
this was driven by annualisation of bid 
wins in the successful 20101 1 season 
supplemented by further success in the 
201 112 season improved charter income 
and the bolton acquisition of vogel in new 
jersey which was acquired at the end 
of 2010 the north american business 
secured both new conversion contracts 
from school board customers outsourcing 
for the first time and share shift wins 
of contracts in the alreadyoutsourced 
market which added over 700 buses  
for the 20101 1 school year growth from  
new conversion contracts won in 201 1  
was approximately twice that of our 
biggest competitor
operating profit increased significantly by 
35 to us769 million 2010 us57  1m 
operating margin has improved to 100 
an increase from 80 in 2010 and 57 in 
2009 this rapid turnaround was executed 
by a new management team through 
growth cost reduction and investment 
in customerfacing personnel to ensure 
that local delivery and relationships have 
been enhanced this margin makes the 
operation bestinclass in the industry
revenue for north america was £4810 million 
2010 £4598m and normalised operating profit was 
£47 9 million 2010 £369m in local currency revenue 
was us7722 million 2010 us712 1m and normalised 
operating profit was us769 million 2010 us57  1m
market size
us24bn 
total school bus market in north 
america represented by 531000 routes
32 is outsourced 68 inhouse 
 outsourced 
 inhouse
market share
10 of outsourced school bus market
 national express group 
 others
national express operates 15292 
regular routes
market composition
top five players operate approximately 
90000 routes
 top five players 
 other operators
40 companies operate 200 buses 
rest of outsourced market split between 
4000 operators
market trends
growth is traditionally inflation and 
population driven the recent increase in 
outsourced conversion is due to public 
funding pressures
market features
local relationship and service delivery 
important
customers
local school boards funded largely  
by local property taxation
transport is a significant part of local 
education spending
competition
bigger players have access to capital 
geographical reach and some scale 
advantages
potential for some market consolidation
labour
traditionally parttime workforce
30 of national express staff unionised
17
business review 
north america business review
north america continued
achieving margin improvement
the margin improvement has resulted from 
decisive action to reduce overhead and 
back office costs in 201 1 an annualised 
saving of us15 million was delivered 
completing the target of us40 million over 
two years key savings in 201 1 included 
streamlining of administration through 
greater efficiency in use of our oracle 
systems investment reduced maintenance 
costs through better planning and warranty 
work and facilityprocurement savings 
operator wage costs were maintained 
in line with the prior year improvement 
towards the end of the year the initial 
benefits of equipping every bus in the 
fleet with gps began to be realised 
lower fuel consumption optimised route 
scheduling and improved invoicing benefits 
are all targeted this will help drive further 
improvements in margin 
alongside the improved operating margin 
we also made significant progress in 
improving the division’s operating profit 
return on net tangible assets to 160 
2010 13 1 in what is a traditionally 
capital intensive business this 
improvement was achieved by working 
with customers to cascade existing buses 
both to new contracts and to replace 
endoflife vehicles whilst evaluating 
possible fleet life extension during 201 1 
over 900 buses were cascaded within 
the fleet additionally the spare bus 
ratio continued to improve to 122 
2010 184 overall this programme 
is estimated to have reduced capital 
investment in 201 1 by us66 million
delivering organic growth
excellent revenue growth in 201 1 was 
achieved through our ‘abc’ plan 
•	 acquisition included a 200 bus ‘bolt
on’ in new jersey leveraging existing 
depot scale and synergy completed 
31 december 2010
•	 bids secured over 400 new routes  
from competitors through better service 
and pricing and
•	 conversions saw over 600 new routes 
outsourced to us by 10 school boards 
for the first time new conversion 
opportunities are a key target for us as 
we grow our school bus business 
our expanded business development 
team has developed a compelling case 
based upon a superior service offering  
and successful mobilisation model which 
offers customers significant cost savings 
often including the removal of the need  
for upfront capital investment
overall we added over 600 new buses 
to our routes for the 201 112 school year 
whilst protecting margins and achieving 
an industryleading 98 retention rate on 
existing contracts in addition our initiative 
to drive higher margin charter revenues 
was successful delivering a 30 increase 
in this revenue in 201 1 with scope for 
further increases in the future
mark perry driver 
durham school services
staff at durham school services 
in dallas have lost the equivalent 
of an entire person since they 
started a fitness challenge last 
september one driver alone 
mark perry has shed 45lbs 
20kg and aims to run the new 
york marathon the 30 people 
who have been taking part in 
the challenge have lost a total 
of 149lbs – or 67kg105 stones – 
between them 
18 kathy hagerman driver 
durham school services
kathy appreciates the benefits of 
the zonar system the pretrip and 
tracking information it provides 
not only helps reduce costs to 
the customer but also helps our 
supervisors to know where our 
buses are and how fast they are 
going this means they can tell 
parents when their bus is due if 
a bus breaks down in service our 
technician can log into it and check 
the diagnostics on the bus before 
going to the scene the system 
also identifies trends in defects 
improving our reliability
for more information on our north 
american business please go to 
nationalexpresscorpcom
growth from new 
conversion contracts 
won in 2011 was 
approximately twice 
that of our biggest 
competitor
securing targeted expansion
the north america mass transport market 
offers considerable scope for expansion 
in september 201 1 we announced the 
acquisition of petermann partners inc 
for us200 million consolidating our 
number two position in the school bus 
market in its fiscal year ending 30 june 
201 1 petermann generated revenue of 
us1499 million ebitda of us293 
million and operating profit of us135 
million we are in advanced discussions 
with regulators regarding competition 
approval and we expect to be in a position 
to close this transaction in the first half 
of 2012 petermann has an excellent 
portfolio of customers and an experienced 
management team adding new 
geographic reach to national express  
to deliver further growth from a quality 
earnings base the acquisition is expected 
to be earnings enhancing in its first full year 
with annual synergies of us7 million by 
the second year 
the petermann acquisition provides 
entry into the paratransit and transit 
markets in north america through an 
existing contract presence this market 
provides free and subsidised transport to 
senior citizens and disabled people and 
is estimated to be worth us5 billion per 
annum rapid growth in these eligible 
populations coupled with low capital 
investment requirements and extensive 
previous experience of the market by our 
management makes this an attractive 
opportunity to leverage our existing 
capabilities in north america 
outlook for the future
with a forward revenue order book of 
us13 billion and improved capital 
disciplines evident in the school bus 
market we will continue selectively to 
target market share addition and a strong 
pipeline of conversion opportunities 
whilst achieving high contract retention 
we expect funding pressures on school 
boards to continue to drive the conversion 
market reflected in the growing number 
of conversion contracts we have won in 
the last three years one in 2009 three in 
2010 and ten in 201 1 the business will 
focus on improving contract management 
and operational efficiency driving further 
improvements in margin and capital return 
we also expect to expand our presence 
in the paratransit market over the coming 
years building a second leg to our 
successful north american operation
19
business review 
north america business review
uk bus
revenue
£2635m
normalised operating profit
£327m
peter coates 
managing director uk bus
our turnaround has been achieved with improved 
financial progress and a strong safety culture there 
is still work to be done i want to grow revenue and 
maximise network efficiency whilst modernising 
aspects of our service and cost base we are attracting 
customers by investing in new vehicles improving 
marketing using technology and raising customer 
service levels
10 110
11 124
10 2943
11 2736
10 082
11 091
10 00
11 22
10 715
11 698
financial kpis nonfinancial kpis
passenger yield
£
passenger  
numbers  
m
mileage  
m
margin

revenue growth 

110
70
24
divisional kpis
we measure our progress against our strategy and goals 
using the following kpis
20 uk bus delivered its second successful 
year of margin recovery moving ahead 
of industry average margin performance 
revenue growth was robust with a return 
to passenger growth in the final weeks 
of 201 1 with its focus on operational 
control improved marketing new services 
and investment for customers uk bus 
delivered a 15 increase in profit yearon
year and is well placed to continue  
to grow returns as an efficient effective  
bus operator
total revenue for the uk bus business 
grew by 22 to £2635 million from £257 8 
million in 2010 likeforlike passenger 
revenue at constant mileage grew 6 
driven by a strong increase in passenger 
revenue of 43 above the industry 
average this was achieved despite the 
west midlands economy remaining weak 
concession income for senior citizen travel 
was slightly lower yearonyear as austerity 
measures impacted public funding
improvement
commercial revenue 4
mileage reduction 2
likeforlike revenue 6
operating profit increased to £327 
million 2010 £283m operating margin 
increased by 140 basis points to 124 for 
the division with the core west midlands 
bus operations achieving over 13 
operating margin our dundee operation 
also increased its margin and there was 
further good progress at the midland metro 
tram service which was profitable in the 
year having broken even for the first time 
in 2010
market overview
market size 
£48bn
uk excluding london
97 is privatised
 privatised 
 nonprivatised
market share
1650 buses operated in the fleet
focused on the west midlands and 
dundee markets
market composition
largest five operators represent around 
70 of the uk market
 largest five operators 
 other private operators
remainder made up of a large number 
of private operators
market trends
shortterm economic pressures from 
austerity and local unemployment
longer term economic regeneration and 
environmentallydriven public transport 
growth opportunities over the car
market features
primarily deregulated market vehicle
regulatory oversight
low barriers to entry – flexibility and 
scale of operations is key
customers
over 90 of west midlands network  
is commercial remainder mostly public 
service tenders
around 75 of revenue from 
passengers balance concessionary
 passenger fares 
 concessions
competition
active competition from national  
and local operators
labour
primarily unionised with strong  
industrial relations
revenue for uk bus was £2635 million 2010 £257 8m 
and normalised operating profit was £327 million  
2010 £283m
21
business review 
uk bus business review
uk bus continued
delivering organic growth
growth of over 4 in commercial revenue 
was driven by an 1 1 rise in passenger 
yield as fares were restructured national 
express continues to offer some of the 
most competitive fares of the major 
uk conurbations passenger volumes 
decreased by 7 partly reflecting an 
overall mileage reduction of 2 we 
have targeted reductions in some off
peak services but increased services to 
meet additional demand elsewhere for 
example retimetabling on the inner circle 
in birmingham has driven 15 passenger 
growth year on year along with a 50 
reduction in waiting times revenue 
protection teams have successfully 
supported revenue uplift and we will be 
doubling the size of that team in 2012 
encouragingly the last few weeks of 201 1 
showed overall passenger journey growth 
we increased our investment in promoting 
the benefits of bus travel in the west 
midlands and dundee we are rolling 
out 250 new vehicles across a 12 month 
period which is expected to boost 
ridership 18 green hybrid buses were 
introduced onto core city centre routes 
in birmingham in december with early 
favourable customer feedback antisocial 
behaviour is being targeted through new 
cleaning antiwindow etching and revenue 
protection measures an increase in 
targeted marketing campaigns included a 
‘love your bus’ promotion partnerships 
with local schools and colleges to 
promote student travelcards ‘grandkids 
for a quid’ and new short hop £1 fares in 
birmingham and coventry city centres 
smarter marketing is raising awareness 
and increased demand is being generated 
through online and telesales teams 
including providing free tickets to home 
movers and discounted family tickets 
we are embedding operational excellence 
across the uk bus business the focus 
is to deliver an efficient ontime bus 
operation at lowest cost to passengers 
we have introduced improvements to 
our ongoing driver training programme 
with industryleading accreditation and 
partnerships based at our inhouse 
college in walsall this is improving driving 
standards and customer service our 
engineering operations have adopted ‘lean’ 
principles which have reduced offroad 
time and increased fleet reliability
jayne blower  
travel shop manager 
national express west midlands
travel shops are “the human 
face of the business” says jayne 
blower manager of the busy 
dudley shop as well as selling 
bus and coach tickets they give 
change and information plan 
routes and sort out problems  
the dudley team has built up  
a strong relationship with many 
local residents and one regular 
customer recently wrote of  
the staff that “nothing’s too  
much trouble”
for more information on our uk bus 
business please go to nxbuscouk
22 carl gauntlett  
schools liaison officer and  
special constable 
national express west midlands
last year schools liaison officer 
carl gauntlett talked to more than 
9000 children in spreading the safer 
travel message to 150 schools 
“talking to year 6 1011 yearolds 
is particularly important – giving 
them reassurance before they start 
travelling to secondary school by 
bus we explain what they need to 
do to keep safe and that they should 
trust the driver to help them” 
achieving margin improvement
supporting revenue growth initiatives 201 1 
saw completion of our twoyear turnaround 
programme driving margin recovery to 
above current industry average levels 
cost efficiencies were delivered across 
engineering procurement and the 
overhead cost base we are leveraging 
the group’s procurement scale with 
£15 million of savings delivered in 
uk bus in 201 1 onboard telemetry 
monitors driving style and is improving 
fuel consumption in addition in 201 1 
our driving out harm safety programme 
combined with telemetry and cctv video 
to reduce insurance claims by £19 million
following publication of the competition 
commission’s final report into the bus 
industry in december 201 1 we do not 
anticipate any significant impacts on our 
business but will look at bus contract 
opportunities to access further growth
outlook for the future
whilst the turnaround of the uk bus 
business is complete improving 
operational excellence is an ongoing 
programme in 2012 we will continue to 
focus on driving revenue growth and cost 
efficiency this will partially mitigate the 
withdrawal by the uk government of £5 
million of annual fuel duty rebate from april 
thereafter we will seek to improve the 
margin towards industry leading levels 
alongside new vehicles we are also 
investing in onbus technology smartcard 
readers have been installed across our 
entire fleet which will be used to make bus 
travel easier for all passengers and grow 
revenue through more targeted marketing 
we aim to have 100 of our buses 
equipped with realtime service information 
in 2012 we are investing in advanced 
driver accreditation alongside customer 
service development to make national 
express the preferred operator for  
our passengers 
with its focus on 
operational control 
improved marketing new 
services and investment 
for customers uk bus 
delivered a 15 increase 
in profit yearonyear
23
business review 
uk bus business review
uk coach
revenue
£259 1m
normalised operating profit
£349m
andrew cleaves 
managing director uk coach
my vision is to be the number one in passenger 
transport for quality and value for our customers 
we will differentiate through excellence of customer 
service and safety we are investing in technology to 
enhance the customer offer and improve operational 
efficiency we can grow passenger numbers through 
competitive pricing leveraging the brand the network 
and our multiple routes to market
10 128
11 135
10 814
11 822
10 167
11 168
10 30
11 35
10 76
11 84
financial kpis nonfinancial kpis
passenger 
numbers 
m
mileage  
m
customer 
satisfaction  

margin

revenue growth 

06
10
divisional kpis
we measure progress against our strategy and goals using 
the following kpis
 core network
24 in 201 1 the uk coach business reported 
a record profit with its new management 
team reestablishing the national express 
coach service as the preeminent value 
leader in long distance travel these 
strong results were delivered through an 
overhaul of the core network and with a 
focus on delivering great customer service 
implementing network investments in 
160 new coaches a 247 contact centre 
and the new coachway station at milton 
keynes the brand continues to see further 
opportunity in austerity meeting the needs 
of cashstrapped consumers against a 
background of increasing rail fares
underlying revenue in the core national 
express network grew by over 5 overall 
uk coach revenue increased 35 to 
£259 1 million 2010 £2503m core 
network yield rose 4 as pricing shifted 
away from heavily discounted promotional 
fares to offering simple consistent 
everyday value revenue in each of the four 
national express coach segments long 
haul short haul regional and airports 
grew during the year 
operating profit increased to £349 million 
an increase of 9 1 2010 £320m 
operating margin was 135 a 70 basis 
point increase 2010 128 this reflected 
both revenue growth and the flexibility of 
the business model where 80 of coach 
service operation is outsourced providing 
the opportunity to adjust to changes 
in demand we continue to see strong 
interest from private operators to partner  
in our service delivery
market overview
market size
£300m
of contested revenues in  
the scheduled coach market  
almost all privatised
 national express 
 other operators
market share
around 1000 destinations served
national express is the uk  
scheduled coach market leader
market composition
national express has the only  
nationwide network of services
other competitors tend to focus  
on specific regions or corridors
market trends
revenue growth through the  
recession reflecting value and 
convenience of coach
selected price competition from  
rail through advance purchase 
discounted fares
market features
highly deregulated market
customer safety and disability  
access supported by regulation
operators able to compete flexibly  
on selected routes
customers
customer satisfaction important  
in driving longer term loyalty
ongoing rail fare increases make  
coach increasingly attractive
competition
selective competition from large bus 
operators and localised services
labour
outsourced model 80 operated 
by thirdparty partners on longterm 
contract
 thirdparty partners 
 owned operations
consistent service and behaviour 
standards across all operators
revenue for uk coach was £259 1 million 
2010 £2503m and normalised operating  
profit was £349 million 2010 £320m
25
business review 
uk coach business review
uk coach continued
achieving margin improvement
the business maintained a rigorous focus 
on cost efficiency mileage operated 
increased by 1 in 201 1 flexing supply to 
meet demand groupwide procurement 
initiatives added further savings including 
leveraging our scale in fleet sourcing for 
partner operators which saw 160 new 
coaches introduced to the network use of 
technology continues to drive down cost 
our fleet is equipped with both ‘traffilog’ 
monitoring and realtime positioning 
systems this is already being used to 
monitor driving style route timings and 
scheduling likeforlike fuel consumption 
was reduced by 3 in the year passenger 
comfort was improved and trials are 
underway to deliver uptotheminute 
schedule updates to customers via station 
information and mobile applications
mark hollis accessibility  
and inclusion manager 
national express
our new accessibility and 
inclusion manager mark hollis 
is looking at all aspects of our 
service for disabled travellers – 
from our booking process to the 
attitude of drivers by the end  
of 2012 almost all of our coaches  
will be wheelchair accessible 
and all staff will have been on 
a disability awareness course 
– for which mark was recently 
recognised with an invitation  
to no 10 downing street
for more information on our  
uk coach business please go to 
nationalexpresscom
delivering organic growth
our growth strategy is focused on 
improving customer service and simplifying 
fares this has already delivered growth 
in each of the core coach segments the 
move away from heavily discounted fare 
promotions has improved overall yield and 
attracted passengers who value a stable 
competitive fare available even on the day 
of travel overall passenger journeys in the 
core business increased by 1 in 201 1 
with airports and regional routes showing 
the highest rates of growth
we have also expanded our network 
adding services and frequencies to reflect 
improved passenger demand data by 
segment and route new routes from 
london and the south coast direct to 
gatwick airport and also ipswich to 
heathrow airport proved popular added 
frequencies from norwich glasgow 
and cardiff to london have seen market 
growth recent additions have included 
new liverpoolmanchesterleeds services 
and we continue to see a growth in daily 
commuter traffic diverting from highpriced 
rail services
building on our investment customer 
satisfaction rose to 84 2010 76 90 
of our passengers would recommend the 
brand our contact centre is now open 24 
hours a day selling tickets and supporting 
customers whenever they are travelling 
an extensive programme of training and 
management tools will continue to improve 
the customer experience
both eurolines and the kings ferry grew 
in 201 1 eurolines added nearly 60000 
passengers with growth on the london
paris and amsterdam routes and the 
introduction of a brussels service contract 
business fell yearonyear following oneoff 
work in 2010 for airlinks and reduced rail 
replacement activity 
26 marjorie wild  
senior customer advisor 
national express
as a senior customer advisor 
at our busy manchester coach 
station marjorie wild uses the 
counselling skills she’s gained 
outside of the business to support 
her work colleagues “listening to 
their problems and being there 
for them” as well as doing her full 
time job marjorie is completing a 
counselling diploma and also works 
as a volunteer for childline and 
age concern
securing targeted expansion
we see the progressive liberalisation of 
continental europe as exciting for coach 
travel which is generally underpenetrated 
eurolines highlights the opportunities 
offered by the value of international coach 
services in difficult economic times for 
consumers leveraging our position 
as europe’s largest scheduled coach 
operator we will seek to develop new 
opportunities in europe and are investing  
in business development to deliver  
future growth
outlook for the future
we will continue to make underlying 
progress in the uk coach business 
during 2012 but we face a significant 
headwind from the withdrawal from 
november 201 1 of the £15 million annual 
senior citizen concession this will be 
partly mitigated through our new senior 
citizens coach card continued network 
improvement flexible pricing leveraging 
of technology and improvements in our 
thirdparty operator partnerships to drive 
better customer service will help grow 
revenue and drive cost efficiency the 
london olympics will also present specific 
opportunities for example the kings 
ferry has secured the contract to provide 
transportation for the metropolitan police 
during the games
the outlook for longer term growth remains 
encouraging we expect the coach 
business to benefit from aboveinflation 
increases in rail fares and higher costs 
of private motoring the division’s strong 
market position iconic brand and value 
proposition make the business uniquely 
placed to grow in the medium term in  
the uk and elsewhere 
our strategy is focused 
on improving customer 
service and simplifying 
fares this has already 
delivered growth
27
business review 
uk coach  year to 7 january 2012
business review
uk rail
revenue
£6883m
normalised operating profit
£434m
andrew chivers 
managing director uk rail
we are focused on continuing the success  
of c2c as the best run franchise in the uk  
together with securing additional rail franchises 
provided the terms are right
divisional kpis
we measure our progress against our strategy and goals 
using the following kpis
10 53
11 63
10 044
11 096
10 025
11 048
10 900
11 910
10 950
11 967
10 1463
11 1542
10 30
11 80
financial kpis nonfinancial kpis
passenger 
numbers 
m
signals passed at  
danger per million  
miles
public performance measure 
moving annual average 

margin

revenue growth 

54
 nxea 
 c2c
28 in 201 1 the uk rail division reported 
strong revenue growth and a significant 
increase in profitability as the leading 
rail operator in the sector the divisional 
profit margin was 63 and operational 
performance exceptional – c2c is the uk’s 
top performing rail franchise with a record
breaking annual punctuality figure of 
969 in the year to 4 february 2012 with 
the handover of the east anglia franchise 
successfully completed in february 2012 
we are focused on delivering further 
improvements at c2c and establishing the 
future potential value that rail may offer in 
the next franchising round
revenue in uk rail rose to £6883 million 
in 201 1 an increase of 80 over the prior 
year 2010 £637 5m national express 
east anglia nxea successfully extended 
its franchise from the department for 
transport dft from october 201 1 to 
february 2012 whilst c2c secured a two 
year extension to may 2013 on a profit 
share basis strong revenue growth saw 
operating profit increase by 28 to £434 
million 2010 £338m operating margin 
increased by 100 basis points to 63 
2010 53 
market overview
market size
£6bn 
of uk franchise revenues  
over next five years based  
on likely pipeline
market share
two franchises reducing to 1 in  
february 2012 – nxea and c2c
these represent 10 of the uk  
franchise market
 national express 
 other franchises
market composition
top four players have around 70  
of the market
 top four operators 
 other operators
19 uk franchises in total
market trends
growth over the past decade driven by 
passenger volumes and fare increases
dependent on employment and gdp
fares will increase by 1 to 3 in real 
terms over the next three years
market features
regulatory environment – expected 
to change to longer franchises and 
increased operator autonomy
highly regulated qualification and 
operational processes
customers
steady growth in passenger volume  
over time
competition
increased international competition  
in uk franchise bidding
labour
relationships are managed within each 
franchise with high union representation
revenue for uk rail was £6883 million 
2010 £637 5m and normalised operating  
profit was £434 million 2010 £338m
29
business review 
uk rail business review
uk rail continued
achieving margin improvement and 
delivering organic growth
with their exposure to the relatively robust 
economies of london and the south east 
both franchises saw good passenger 
growth throughout the year of 5 
extension of the londonbased oystercard 
system drove strong passenger growth 
through easeofuse albeit at lower yield 
elsewhere growth in suburban travel more 
than offset weak volumes on the stansted 
express service which reflected reduced 
volume in lowcost air travel
nxea successfully completed 
implementation of its £185 million dft
funded capacity upgrade programme 
adding 1 1000 peaktime seats into 
liverpool street and delivering 30  
new 379 electrostar trains to the network 
on time and on budget the business 
received all its project milestone  
payments whilst significantly improving  
the customer experience 
c2c successfully implemented a new 
timetable providing additional stops at 
west ham to provide greater transport 
connectivity c2c has won or been 
shortlisted for eight awards in 201 1 
underlining its industryleading position
marion bridge  
customer service assistant 
c2c
thousands of ship passengers 
arriving at the london cruise 
terminal in tilbury often have just 
a few hours to see london so 
c2c’s marion bridge who works 
at tilbury station has made it part 
of her job “to give them a good 
experience” and for the past 
seven years has given out goody
bags filled with timetables maps 
and discount vouchers which help 
boost tourism
30 paul thomas  
customer service assistant 
c2c
for the past 16 years paul thomas 
has sold tickets at london’s 
fenchurch street station he 
dispatches the c2c trains too and 
he makes station announcements 
as well helping to train and mentor 
new colleagues 
not all at the same time of course 
but paul’s versatility and enthusiasm 
have earned the respect of his 
colleagues “variety’s the spice  
of life” he says
for more information on our  
uk rail business please go to  
c2conlinecouk
outlook for the future
operation of the nxea franchise came 
to an end on 5 february 2012 with the 
franchise successfully handed over to the 
new operator as is usual for commuter
orientated franchises a cash outflow of 
approximately £80 million will occur in 
2012 primarily related to prepaid customer 
season ticket monies that are transferred  
to the new operator
the business is focused on the continued 
successful operation of the c2c franchise 
and on securing future rail franchises if the 
terms of the new bidding process prove 
attractive for the group over the longterm 
c2c has recently announced an innovative 
alliance with network rail which builds  
on its existing joint signalling and operating 
control partnership the alliance will 
deliver cost savings to government and 
ultimately passengers through better 
planning and implementation of projects 
better managed stations and further 
improvements in train punctuality 
the group has also invested in additional 
resource to evaluate bid and operate 
future uk rail franchises retaining a core 
team of experienced rail experts national 
express has submitted prequalification 
bids for the future essex thameside c2c 
great western and thameslink services 
this has been supported by c2c recently 
being awarded four stars in the british 
quality foundation’s recognised for 
excellence r4e programme assessed 
against the european foundation  
for quality management model 
whilst national express has a successful 
platform for future value creation built 
on its four international bus and coach 
businesses we believe that the potential 
earnings and cash generation from future 
rail franchises could be a valuable addition 
to our portfolio whilst supporting access to  
other global rail opportunities participation 
will however depend on the potential 
returns and risks of the future franchises 
being acceptable
c2c is the uk’s top 
performing rail franchise 
with a recordbreaking 
annual punctuality figure 
of 969
31
business review 
uk rail financial review
continued improvement
the group has delivered a strong performance  
in 201 1 recording a record statutory profit before tax  
and amortisation of £1802 million
four of our five divisions 
are now at industry
leading margins with 
scope for further progress 
through a relentless focus 
on operational efficiency 
combined with delivering 
high margin organic 
growth 
revenue
group revenue in 201 1 was £22380 
million an increase of 53 from £2 1259 
million in 2010 revenue growth in every 
division was primarily driven by yield 
improvement on a contractualregulated 
basis as in north america alsa and uk 
rail and through fare pricing in uk bus 
and uk coach 
operating profit
group normalised operating profit 
increased by over 10 to £2252 million 
from £2042 million in 2010 201 1 saw 
completion of the group’s twoyear 
turnaround programme over this period 
cost reduction programmes have reduced 
overhead and back office costs improved 
driver and engineering efficiencies and 
delivered substantial savings by leveraging 
the group’s global procurement scale 
group normalised operating margin 
increased in 201 1 by 50 basis points 
to 10 1 2010 96 four of our five 
divisions are now at industryleading 
margins with scope for further progress 
through a relentless focus on operational 
efficiency combined with delivering high 
margin organic growth 
the principal areas that contributed to this 
increase in profitability were
•	 profitable organic growth adding £39 
million driven by yield and passenger 
journey growth and the addition of new 
contracts in north america and spain 
and
•	 cost reduction programmes focusing on 
 – procurement savings of £12 million 
across the group including vehicle 
parts telecoms and it 
 – insurance savings of £3 million 
reflecting safety improvement led by 
the driving out harm programme  
and
 – targeted cost efficiencies savings of 
£21 million mainly in overhead costs
jez maiden
2010
organic
growth
costs
procurement
other
development
project
 costs
depreciation
inﬂation
2011
£204m
£39m
£21m
£12m
£10m
£3m
£9m
£6m
£43m
£225m
improvement in normalised operating profit 2011
32 for more information on our group please 
go to nationalexpressgroupcom
these benefits were partially offset by
•	 investment in business development 
resource to expand into new businesses 
and markets together with investment in 
talent and people development together 
adding £3 million
•	 project costs of £9 million primarily 
settlement of a working time claim in the 
usa professional and legal fees relating 
to the strategic and board debate 
ahead of the 201 1 agm competition 
commission project costs and 
preacquisition costs
•	 fuel costs rising by £1 million with higher 
hedged prices
•	 depreciation increasing by £6 million 
reflecting increased investment in vehicles 
in north america and spain and
•	 general cost base inflation of 3 adding 
£43 million
normalised result
net finance costs were £464 million 
2010 £440m the increase from the 
previous year reflecting a full year of higher 
fixed interest rates on the 2010 bonds 
profit before tax increased by 12 to 
£1802 million 2010 £1605m 
the tax charge was £415 million 2010 
£392m an effective tax rate etr of 
230 2010 244 profit for the year  
was £1387 million 2010 £1213m  
giving a basic eps increase of 144  
to 27 0 pence 2010 236p 
dividends
eps estimated on nonrail earnings only 
that is excluding the aftertax uk rail profit 
and benefit to interest of rail season ticket 
monies was 203 pence 2010 17 9p 
with a paid interim dividend of 3 pence 
per share and a proposed final dividend 
of 65 pence the total dividend for 201 1 of 
95 pence 2010 6p is covered 2 1 times 
2010 30x by nonrail earnings and 28 
times 2010 39x by total earnings the 
proposed dividend record and payment 
dates are 27 april and 18 may respectively
statutory profit
group statutory profit before tax increased 
threefold to £1294 million 2010 £402m 
the group incurred no exceptional costs 
maximising the benefit to shareholders 
of profit growth this reflects significant 
progress delivered in 2010 to reduce  
or eliminate legacy risks including resolution 
of outstanding uk tax issues with hmrc 
termination of the group’s onerous contract 
for eurostar operations and reduced future 
exposure to uk pension schemes
intangible asset amortisation relating 
principally to the value of the group’s 
concessions and contracts in spain and 
north america reduced to £508 million 
2010 £57  1m exceptional charges were 
£nil 2010 £632m statutory profit for the 
year was £1026 million 2010 £623m 
diluted eps was 198 pence 2010 120p
cash management
national express continues to focus 
on cash generation as a key driver of 
longterm shareholder value with the 
group turnaround now complete cash 
application has been aligned to our 
strategic objectives – investment in organic 
growth acquisitions and a sustainable 
dividend payout
normalised operating profit £m
10
11
10
11
10
11
10
11
10
11
901
862
479
369
327
283
349
320
434
338
130
spain 
north america
uk bus  
uk coach
uk rail
33
financial review 
continued improvement  financial review
continued
operating cash flow
group operating cash flow in 201 1 was 
£1598 million 2010 £2217m reflecting 
reinvestment of higher profits in fleet 
renewal operating cash conversion  
in 201 1 was 71 2010 109 
an increase in working capital of £525 
million 2010 inflow £143m was primarily 
driven by a £35 million increase in spain 
of this £18 million related to settlement of 
deferred social security together with an 
increase in the receivables balance due 
to revenue growth and slower payment 
the latter principally from one public body 
with whom a repayment schedule has 
been agreed all receivables are closely 
managed and legally documented 
the spanish governing party recently 
confirmed that public body debts would 
be fully repaid ongoing pension deficit 
payments in the uk totalled £97 million
maintenance capital expenditure increased 
by £225 million to £1 102 million 2010 
£87 7m 104 of depreciation 2010 88 
with spend primarily in the north america 
alsa and uk bus divisions in fleet and 
realtime information technology this level 
of expenditure is planned to be sustained 
over the next few years as a key driver of 
passenger growth the average age of the 
group’s fleet reduced in 201 1 to 58 years 
2010 6 1 years 
free cash flow
free cash flow in 201 1 increased to £844 
million 2010 £837m exceptional cash 
payments reduced significantly in 201 1 with 
no inyear expense charge cash payments 
of £220 million 2010 £867m relate to final 
payments for exit from the east coast rail 
franchise in 2009 redundancy and project 
costs provided in 2010 and the termination 
of an onerous contract between the group 
and the eurostar operator lcr
net interest payments were £446 million 
2010 £427m and cash tax remained 
broadly unchanged at £84 million 2010 
£86m well below the group’s etr due  
to tax amortisation of acquisition goodwill 
in spain and tax losses in north america 
for more information on our results please 
go to nationalexpressgroupcom
investors
free cash flow
2011  
£m
2010  
£m
operating cash flow 1598 2217
discontinued operations – 35
uk rail franchise entry and exit 58 220
exceptional cash flow 82 526
payments to associates 80 86
subtotal – exceptional  
cash payments 220 867
net interest 446 427
dividends paid to minorities 04 –
taxation 84 86
free cash flow 844 837
operating cash flow
2011  
£m
2010  
£m
normalised operating profit 2252 2042
depreciation 1055 998
grant amortisation profit on disposal 
and sharebased payment 24 02
ebitda 3331 3042
net maintenance capital expenditure 1102 877
working capital movement 525 143
pension contributions above  
normal charge 106 91
operating cash flow 1598 2217
34 national express 
continues to focus on 
cash generation as a 
key driver of longterm 
shareholder value
net funds flow
a strong focus on cash generation allows 
the group to allocate capital to growth 
acquisition and dividends whilst keeping 
debt levels within our gearing policy a 
progressive dividend is well covered by 
nonrail earnings whilst future surplus 
capital will be invested in valuegenerating 
growth and acquisition projects or 
returned to shareholders
in 201 1 £356 million was invested in 
organic growth capital 2010 £339m 
– £23 million in north america to fund 
fleet investment in new share gain and 
conversion contracts and £9 million in 
alsa to fund growth in morocco and  
the new madrid tour service
the group invested £7 6 million 2010 
£26m in acquisitions in north american 
school bus and in spain it resumed 
dividend payments in 201 1 group net 
funds flow in 201 1 was an outflow of 
£233 million 2010 inflow £47 5m
group net debt at 31 december 201 1  
was £6337 million 2010 £6104m
capital allocation and returns
national express has a portfolio of 
businesses that provide a blend of 
opportunities for sustainable growth 
profitability and cash generation the 
group’s strategy is designed to use the 
funds at its disposal to make investment 
decisions that will result in longterm 
generation of shareholder value the 
group uses pretax return on capital 
employed roce as a core kpi to decide 
upon and measure the delivery of strategic 
new investment internal capital allocation 
decisions are made with a 12 pretax 
return on capital hurdle rate based on an 
estimated posttax weighted average cost 
of capital of 8 in 201 1 group roce 
increased to 14 1 2010 132 with 
strong incremental returns in spain and 
north america the latter supported by 
initiatives to improve fleet utilisation the 
group is targeting a 15 pretax return on 
capital in the medium term subject to the 
proportion of rail business
treasury management
the group has a strong funding platform 
a combination of longterm maturity  
on bond and undrawn bank financing 
strong liquidity and headroom capacity 
together with a broad banking group  
allow the group to pursue its strategic 
goals effectively 
funding sources
longterm funding for the group is 
provided from nonbank long maturity 
term financing two sterlingdenominated 
public bonds – comprising a 625 
£350 million bond maturing in 2017 and 
a 6625 £225 million bond maturing in 
2020 – and longterm amortising finance 
leases of £129 million provide this capacity 
in addition the group has a £500 million 
committed unsecured revolving bank 
facility maturing in august 2014 which was 
undrawn at 31 december 201 1 the group 
is investment grade rated moody’s baa3 
neutral outlook fitch bbb stable outlook 
covenant compliance
the group maintains adequate headroom 
over its banking covenants which continued 
to improve during the year as follows
•	 debt gearing ratio net debt to ebitda 
19 times 2010 2 1x covenant not to 
exceed 35x and
•	 interest cover ratio ebitda to net 
interest 7 2 times 2010 69x covenant 
not to be less than 35x
interest rate and currency hedging
the acquisition of petermann when 
completed will initially be funded by 
cash drawn down from the bank facility 
following this acquisition and the handover 
of the east anglia rail franchise the board 
expects the group to operate at the upper 
end of its target gearing ratio of 20 to 25 
times ebitda over the next 18 months
net funds flow
2011  
£m
2010  
£m
free cash flow 844 837
net growth capital expenditure 356 339
financial investments and shares 27 17
rights issue – 39
acquisitions and disposals 76 26
cash flow on the maturity of foreign 
exchange contracts 128 20
dividends 458 –
foreign exchange and other  
noncash movements 32 79
net funds flow 233 475
35
financial review 
continued improvement  financial review
continued
the group hedges its exposure to interest 
rate movements to maintain a balance 
between fixed and floating interest rates on 
borrowings to achieve the desired fixed
floating ratio the group has entered into 
a series of interest rate swaps that have 
the effect of converting fixed rate debt to 
floating rate debt the net effect of these 
transactions was that as at 31 december 
201 1 the proportion of group net debt at 
floating rates was 16 2010 19 
as its debt is primarily denominated in 
sterling the group uses foreign currency 
contracts to create synthetic debt positions 
to partially hedge the exposure of our 
spanish and us ebitda and assets 
at 31 december 201 1 the principal 
resultant foreign currency debt exposures 
were €250 million and us195 million 
further details of the group’s treasury 
management policies are set out in  
the accounts
fuel risk management
the group consumes approximately 250 
million litres of fuel each year mostly of 
ultra low sulphur diesel and gasoline 
which represented a total cost including 
delivery and taxes to the group in 201 1 
of £181 million 8 of group revenue 
at an average fuel cost of 40 pence per 
litre the group has adopted a forward 
fuel buying policy in order to secure a 
degree of certainty in its planning based 
on expected hedgable consumption a 
proportion of this is fixed for the future 
currently the group is 100 fixed for 
2012 at an average price of 44 pencelitre 
excluding delivery and tax and 50 fixed 
for 2013 at an average price of 47 pence 
the group seeks to hedge a minimum of 
15 months demand across all exposed 
businesses where businesses have 
freedom to price services this hedge 
provides sufficient protection to recover 
fuel price increases through the fare 
basket in contract businesses where  
price escalation may be restricted by 
a formula independent of fuel costs 
extended cover up to the life of the 
contract may be taken subject to 
availability and liquidity in the hedging 
market the latter is rarely available beyond 
three years from the trading date 
national express has a 
portfolio of businesses 
that provide a blend 
of opportunities for 
sustainable growth 
profitability and cash 
generation
pensions
the group’s principal defined benefit 
pension schemes are all in the uk  
at 31 december 201 1 these schemes 
had a combined deficit under ias 19 of 
£18 million an improvement from a deficit 
position of £104 million at 31 december 
2010 the national express group  
staff pension plan uk coach plan  
is now closed to all future accrual  
a funding plan aimed at bringing the plan 
to self sufficiency over a six year period 
was agreed in 2010 national express 
contributes £42 million per annum to 
this scheme in 201 1 uk bus agreed a 
£55 million annual deficit repayment plan 
with the trustees of the west midlands 
passenger transport authority pension 
fund wm plan to fund a £71 million 
scheme funding deficit the plan remains 
open to accrual for existing active 
members only
the ias 19 valuations by division at 
31 december 201 1 were as follows
•	 uk bus under the wm plan and the 
tayside transport superannuation 
fund £168 million deficit 2010 
£53m deficit
•	 uk coach plan £186 million surplus 
2010 £nil and
•	 uk rail £22 million deficit 2010 
£37m deficit the group’s rail business 
participates in the railways pension 
scheme this exposure transfers to 
an incoming operator in the event of a 
franchise termination as has happened 
on the east anglia franchise
jez maiden 
group finance director
29 february 2012
36 the group has a well established 
governance structure that has 
responsibility for the internal control 
systems and reviewing their effectiveness 
the risk management process
•	 provides a framework to identify assess 
and manage risks both positive and 
negative to the group’s overall strategy 
and the contribution of its individual 
component divisions
•	 gives business unit management formal 
tools to identify and manage risks in their 
daytoday operations
•	 allows group executive management 
to identify and manage the risks that are 
likely to have a more significant impact 
on the financial results and strategy and 
share common issues and solutions 
across the group and
•	 allows the board to fulfil its governance 
responsibilities by making a balanced 
and understandable assessment of 
the operation of the risk management 
process and its outputs
responsibilities and actions
the board
•	 has overall responsibility for the group’s 
system of internal control and for 
reviewing its effectiveness
•	 maintains full control and direction 
over appropriate strategic financial 
operational and compliance issues and
•	 has put in place an organisational 
structure with formally defined lines  
of responsibility delegated authorities 
and clear operating processes
risks
risks and risk management
the audit committee 
•	 has specific responsibility for reviewing 
the effectiveness of the group’s internal 
control and risk management systems
•	 is responsible for the identification 
assessment and management of risk 
including actions taken and processes 
adopted to do so
•	 reviews and approves all financial 
information published by the group and
•	 reviews the internal audit programme 
considers major findings of the internal 
audit investigations and reviews 
management’s financial reporting  
and risk management
risk review process
each division plus the group function is 
required to make a formal review of risks to 
their business objectives assess the impact 
and likelihood of the risk occurring and put 
in place mitigating actions processes and 
systems to manage the risk
risks
identify risks to business objectives on  
a bottom up basis risks are described  
and categorised into operational strategic 
and financial risks in order to help define 
their precise nature and potential impact  
on the business
assessment 
assess and quantify the potential impact 
on business objectives and determine 
the likelihood of the risk occurring this is 
done on a ‘before’ and ‘after’ basis where 
the impact of management controls is 
assessed in relation to the probability  
and severity of a risk
management
take mitigating actions and implement 
systems to manage the likelihood and 
impact of the risk identify an individual  
with responsibility for each risk
monitoring and control
risks are considered on a monthly basis  
at divisional level and formally updated 
twice a year management is encouraged 
to review the risk registers from other 
divisions to identify common issues and 
potential solutions
each divisional register including the 
group function register is consolidated  
into a group risk register
the group executive committee reviews 
the group risk register twice a year 
followed by the group audit committee 
the audit committee reports in turn to the 
main board 
the internal audit function has 
responsibility for the monitoring of the risk 
management and internal control systems 
internal audit report to management 
and the audit committee on the extent 
to which internal controls are adequately 
designed and implemented
risk assessment review
identify
assess review
mitigating actions
group executive
committee
plc board
audit committee
risk assessment and review
the group has a well established 
governance structure that has 
responsibility for the internal control 
systems and reviewing their effectiveness 
37
financial review
risks and risk management principal risks of 2011 
during 201 1 the group focused on the following key areas of risk
risk assessment management year on year 
change
economic conditions  
and austerity
difficult economic conditions currently 
exist in europe and north america 
whilst some of the group’s businesses 
have naturally defensive characteristics 
some of the more discretionary parts of 
the business may be adversely affected 
by reduced economic activity
revenues in the bus coach and 
rail businesses in the uk and spain 
may be affected by lower passenger 
demand there is also some positive 
risk that the group would benefit from 
the prospect of modal shift towards its 
forms of transport in north america for 
example school boards may reduce 
their transportation budgets or look 
to shift provision to contractors like 
national express in spain the group 
has continued to grow revenue and 
profit in conditions of sustained high 
unemployment and low gdp growth
the group seeks to mitigate these risks 
through proactive cost control revenue 
management systems the careful 
economic modelling of new and existing 
contracts including sensitivities around 
expected growth rates and through 
sharing risk with contracting parties
political and regulatory
the group’s businesses are subject 
to numerous laws in the jurisdictions 
in which they operate regulating the 
operation of concessions safety 
procedures equipment specifications 
employment requirements 
environmental procedures and  
other operating issues
changes in political and regulatory 
environments can have a significant 
impact on regulated public transport 
operators from adding significant cost 
to changing the fundamental nature of 
a market for example changes in uk 
government policy will result in material 
decreases in subsidies paid in 2012  
for fuel and senior citizen discounts 
changes to the uk rail franchising  
regime are also expected
the risk is reduced by maintaining close 
relationships with key stakeholders and 
ensuring that the economic advantages 
of our business models are fully 
understood and considered
ongoing risks
the following risks are key ongoing risks within the business 
risk assessment management year on year 
change
fuel cost
all of the group’s businesses are 
exposed to fuel costs – primarily ultra 
low sulphur diesel for buses and 
coaches fuel prices are subject to 
significant volatility due to economic 
political and climate circumstances
fuel costs constitute approximately 9 
of the group’s costs and consequently 
to the extent that price increases cannot 
be passed on to customers increases 
in fuel costs will affect profitability
the group seeks to mitigate risks of 
increases in fuel costs by entering 
into fuel swaps and forward purchase 
contracts in line with the group’s 
hedging strategy discussed on page 36
insurance and claims
the group’s policy is to selfinsure  
a number of potential claims within  
its business
there is a risk that a successful claim or 
series of successful claims may result in 
substantial higher charges to profit and 
cash outflow than expected
throughout the business a strong 
safety culture prevails led by the board 
safety  environmental committee 
where claims arise they are managed 
by experienced claims handlers and 
professional advice is obtained in 
order to evaluate and minimise costs 
to the group it has also reduced self
insurance values and increased external 
market coverage
risks
principal risks and uncertainties
outlined below are risks that have the potential to affect the group’s performance  
in a material way which are monitored through the risk management processes
38 risk assessment management year on year 
change
credit risk
as contractual operations the north 
american and spanish businesses are 
exposed to the risk that customers are 
either late or unable to pay sums owed 
to the group
payment terms and cash collections 
in north america are extremely good 
in spain during 201 1 one principal 
urban council became slower to pay 
outstanding debts prompted by issues 
related to local and federal elections 
as well as financial constraints the 
total days outstanding balance is not 
significantly higher than normal levels
receivables in each business are 
closely monitored based on robust and 
thorough documentation provisions 
are then made where appropriate on 
a prudent basis for a certain level of 
noncollection this provision increased 
during the year to reflect the overall 
balance increase additional contractual 
terms for interest accrual and repayment 
of outstanding balances were agreed 
with the major debtors we also 
anticipate the new federal government 
will provide credit funding to assist some 
degree of clearance of long term debt
currency
the group’s exposure to overseas 
earnings through its spanish and north 
american operations creates a risk  
that movement in exchange rates  
may adversely impact translation of 
profit and cash flows together with 
group gearing
the potential impact is limited to the 
translation of cash flows and balance 
sheet assets and liabilities the group 
currently pays interest on mainly sterling 
denominated debt during 201 1 currency 
fluctuations were relatively small
the group uses limited overseas debt 
and currency swaps to reduce the 
impact and mitigate the risk in addition 
management has flexibility to adjust 
its group capital allocation decisions 
to focus on its highly cash generative 
uk businesses the board has also 
considered options for the group in 
the event of a break up of the eurozone 
and policies are in place to minimise 
exposure to this possibility
 
risk assessment management year on year 
change
contractual
much of the group’s business is 
secured through winning contracts and 
concessions particularly in its north 
american school bus business in spain 
and in uk rail
an inherent risk in contract bidding is 
that bid assumptions might prove to be 
incorrect if the group’s significant bid 
assumptions prove to be incorrect this 
could have an adverse effect on results 
of the operations and the group’s 
financial condition
the group seeks to mitigate the risk 
through careful economic modelling of 
new contracts and by sharing revenue 
risk with the awarding body for example 
with the dft in uk rail
39
financial review
risks and risk management living our values
corporate responsibility  
at national express group
40
national express is fortunate as there is a 
coincidence of benefit in what we do what is 
good for our customers is good for our business 
and good for society we are a private sector 
company that provides public services the 
better the services we provide the more people 
use them benefiting the environment and our 
economies as well as our shareholders  safety kpis  
2011
our vision and values are fundamental 
to who we are as a business and as an 
active corporate citizen we know that a 
safe business is a better business as it 
will be run more effectively than an unsafe 
one reducing greenhouse gas emissions 
makes sense – commercially as well as 
environmentally investing in people builds 
stability and loyalty customer service 
excellence is both right and helps grow  
our business 
we have defined our values to focus on 
four areas ensuring the safety of our 
customers our employees and the public 
generally trying harder than anyone else 
for our customers enabling our people to 
reach their full potential and give their best 
and advancing the social environmental 
and economic conditions of the 
communities in which we operate
corporate responsibility for national 
express is living these values 
safety
nothing matters more than safety it is  
our number one priority and our ambition 
is to have the best safety record in the 
transport sector 
in 2010 we developed a fiveyear group
wide safety improvement programme 
called driving out harm the approach we 
are taking is rigorous and the standards 
we are setting are high – for example the 
introduction of alcolocks on our coaches 
these breathalyser devices prevent the 
vehicle from starting until the driver has 
successfully passed a breath test the  
limit we are using is exceptionally low – 
more than four times lower than the legal 
drinkdriving limit – and during 201 1  
we completed more than 50000 tests  
a month in uk coach alone
driving out harm is a major culture change 
programme and for any such initiative 
to succeed requires visible commitment 
from the top driving out harm is being 
led by our chief executive and during 
201 1 the frequency of site safety visits 
by senior managers tripled from four a 
year to one a month furthermore all line 
managers throughout the group have 
now completed formal training designed to 
equip them to manage the improvements 
in our safety performance 
at the end of the year our new safety 
management arrangements were 
independently reviewed by the leading 
safety consultancy company arthur d 
little they found that the programme had 
‘achieved all that was expected so far’ and 
that ‘commitment to and strong leadership 
of safety is evident and awareness of 
driving out harm among the workforce  
is high’
overall performance against most of our 
key indicators was better in 201 1 than in 
2010 across all divisions and geographies 
particularly marked improvements were 
seen in the second half as the impact of 
the safety programme – still in its first year – 
began to be felt
the programme is intended to deliver a 
50 improvement in safety performance 
in the five years to 2016 each of our 
businesses has annual targets and safety 
plans which provide both shortterm focus 
and a strategic mechanism for achieving 
our longer term goal
edward dacey driver 
national express
at the start of every shift and 
after every break coach driver 
edward dacey blows in to his 
alcolock system to enable him 
to start his coach “the system 
gives me and my customers 
the assurance that i am safe to 
drive” said edward the alcolock 
system which is centrally 
monitored is now fitted to all 
national express coaches and 
performs thousands of breath 
checks each day 
41
living our values
corporate responsibility at national express
preventable vehicle  
accidents per million miles
199 10
170 11
111 10
84
136
128
11
10
11
241 10
213 11
signals passed at danger  
per million train miles
10 044
11 096
10 025
11 048
lost time employee injuries per  
1000 fulltime equivalent employees
10
11
10
11
10
11
10
11
10
11
490
428
229
167
426
414
483
353
170
127
spain 
north america
uk bus  
uk coach
uk rail
nxea 
c2c customers
service is at the core of our business the 
better the service we provide the more 
likely people are to switch to us either from 
our competitors or from their cars our 
vision is to create real customer loyalty we 
want people to travel with us as often as 
possible increasing customer satisfaction 
will increase our revenue
so by the end of 2014 we aim to be the 
customer service leader in the transport 
sector as part of a longer term plan to be a 
provider of worldclass service by the end 
of 2017
while this is an ambitious target we are 
starting from a fairly high base recent 
research from the institute of customer 
services indicates that national express 
in the uk is already considered to be a 
top quartile service provider across all 
industries with uk coach second only  
to virgin atlantic in the transport sector
even worldclass service is not rocket 
science it is about delivering the basics well 
– but doing it every single time it is about 
politeness as well as punctuality making 
sure that toilets are clean that our staff are 
knowledgeable and helpful that they smile 
– and mean it we aim to provide service 
of great consistency so that customers feel 
they are getting exceptional value for money 
when weighing the price that they pay with 
the experience that they have
during 201 1 we put in place the tools to 
help deliver excellence groupwide service 
standards have been launched and action 
plans developed for staff at all levels of 
each of our businesses we have begun 
a rolling audit programme at our coach 
stations assessing behaviour as well as 
infrastructure progress against our kpis 
will be reported to the group executive 
every month
people
201 1 saw the launch of the group’s vision 
for its people
•	 enabling them to reach their full potential 
and to give their best as individuals and in 
teams and
•	 behave towards each other with the  
same respect and dignity that we expect 
for ourselves
we launched five standards and supporting 
programmes relating to recruitment 
induction performance and talent 
management and to workplace rights 
these are designed to modernise the 
management culture of the group and 
ensure that at every level of the organisation 
we get the right people in the right jobs 
doing the right things in the right ways 
we conduct regular surveys of employee 
opinion to keep in touch with the views  
and feelings of our people
as part of the talent management 
programme each of our top 100 managers 
has been given an individual development 
plan with over half of this cadre also receiving 
highly tailored onetoone coaching
emergency and scheduled succession 
plans have been established for all of 
our senior positions in addition we now 
have around 100 people – generally 
frontline managers – on our high potential 
programme as a means of growing our  
own senior managers of the future 
during 201 1 we also developed a rigorous 
performance management process and a 
management blueprint which defined what 
we want managers to do – and not to do 
the intention is to encourage a specific set 
of behaviours that in turn will improve levels 
of workforce engagement 
in 2012 we will be extending our talent 
management training to include all managers 
from frontline supervisors upwards 
living our values
corporate responsibility  
at national express group continued
tco
2
e tonnes of carbon 
dioxide equivalent
uk greenhouse gas 
emissions tco
2
e
10 516700
11 502000
site energy usage uk bus
55
reduction in gas consumption
19
reduction in electricity consumption 
recycling c2c
87
ontrain waste
96
station waste
42 raj bhutta  
driving training instructor  
national express
raj bhutta is a driving training 
instructor for national express in 
walsall last april he swapped the 
west midlands for tanzania to work 
with the charity transaid training 
local bus drivers to be driving 
instructors “some tanzanian bus 
drivers don’t even have a licence” 
raj says “but the quality of our 
trainees was high and they really 
embraced our efforts it was  
a fantastic experience”
across the group more 
than 100 community 
organisations and 
charities were 
supported either 
through a donation  
or support in kind
community
our 201 1 environmental performance is 
something we are proud of 
our new birmingham coach station for 
example is the only one in the country to 
be accredited to the breeam excellent 
standard breeam is the world’s leading 
design and assessment method for 
sustainable building we are aiming 
to achieve the same rating for all new 
developments which will include two new 
bus garages and a coach garage in the 
next two years our intention is that these 
new developments will have zero net co
2
 
emissions and will therefore be carbon 
neutral this will be achieved by investment 
in energy efficiency measures including 
smart meters building insulation and 
onsite renewable energy regeneration 
we are also working with the chartered 
institution of building services engineers and 
liverpool john moores university to create 
a system for the rail industry to benchmark 
property efficiency and sustainability no 
such system currently exists
investment in our c2c rail business has 
already seen us become the industry 
leader in energy efficiency and in waste 
recycling – and coaches are the greenest 
form of transport we have mediumterm 
targets for reducing our carbon emissions 
– and deliberately so we believe medium
term targets are more meaningful than 
targets set many years hence and make 
us more accountable during 201 1 we 
installed voltage optimisation equipment at 
all of our bus garages which has resulted 
in a saving of 1 million kwh or 19 of the 
electricity used at these sites and almost 
550 tonnes of co
2
 a year 
gas consumption has fallen even more 
steeply installing automated gas control 
systems at our bus garages saved almost 
2200 tonnes of co
2
 and cut gas usage  
by 55 we are now looking to roll this  
out to our coach and rail operations
as well as emitting significantly less carbon 
than other modes of transport our buses 
coaches and trains significantly reduce 
congestion – and its economic cost 
for example a third of all commuters in 
birmingham travel on national express 
operated buses if they were to drive 
instead that would add a traffic jam 
equivalent to the distance between 
birmingham and moscow 
national express is an international 
business and takes its community 
responsibilities seriously wherever it 
operates across the group more than 
100 community organisations and charities 
were supported either through a donation 
or support in kind a total of £228000  
was donated to charities during the year
in morocco for example we are 
supporting a unicef project which 
focuses on improving the care offered  
to mothers and newborn children with  
the aim of reducing neonatal mortality
in the usa 14 of our school bus fleets 
have achieved green school bus fleet 
certification from the national school 
transportation association this is the only 
programme of its kind to recognise school 
transportation companies for providing 
environmentally responsible transportation 
through the use of new technologies
throughout our north american 
operations we launched an adopta
school programme in 201 1 this has seen 
our employees volunteering to help schools 
in their communities from new york to 
new mexico california to south carolina 
and oklahoma to ontario 
the range of activities varies greatly from 
collecting food clothing and toys for 
needy families to taking part in reading 
programmes but they are all based on 
finding ways to build strong relationships 
with our communities and our customers
in the uk our employee charity panel 
continues to encourage staff to get 
involved in the community with a total  
of £20000 donated during the year
overall we made real progress across  
our community agenda during 201 1  
and have the structures in place to do  
even better in 2012 
43
living our values
corporate responsibility at national express governance
chairman’s overview
 dear shareholder 
201 1 was another successful year for national express 
and another year during which we saw an ever increasing 
focus on standards of corporate governance the board 
as a whole recognises that good governance results in  
a good business and goes further than simply following  
a series of rules at national express we seek to  
make good governance an integral part of our  
business philosophy 
in the following section of this report we 
have sought to give a clear description  
of our board and committee structure  
and the processes that support it which 
are at the heart of good governance  
i have asked my colleagues who chair 
our various board committees to highlight 
for you some of the work that has been 
undertaken by the committees during the 
year their reviews follow later in this report 
in this letter i would like to deal with some 
issues that i mentioned in my letter to you 
last year
refreshment of the board
during 201 1 we have continued and 
accelerated the process of board 
refreshment after carefully reviewing the 
appropriate balance of skills expertise 
experience and knowledge required by 
the company we conducted a search 
using two firms of independent search 
consultants for two new nonexecutive 
directors with international experience 
such was the quality of the candidates 
whom we encountered we decided finally 
to appoint three new independent non
executives to the board chris muntwyler 
joaquín ayuso and lee sander these 
appointments have increased the diversity 
of the board and enhanced both its 
continental european and north american 
experience in june 201 1 roger devlin 
decided to step down as a nonexecutive 
director and i would like to thank roger 
for his tremendous contributions during 
his time on the board the arrival of three 
new nonexecutives has been a significant 
change which it is my duty to manage  
the new board has developed well and  
we will continue to monitor the balance 
of skills and experience on the board to 
ensure that it meets the changing needs  
of the business
for more information on corporate 
governance and our board of directors 
please go to nationalexpressgroup
comaboutuscorporategovernance
john devaney
quick reference guide  
to the contents of the 
governance section
1 overview of board of directors  p46
2 role of the board  p48
3 structure of the board  p48
4 key governance and business matters  p48
5 independence  p49
6 principal committees of the board  p49
7 the chairman and group chief executive 
 p50
8 senior independent director  p50
9 executive directors  p50
10 information and professional development 
 p50
11 performance evaluation  p51
12 relations with shareholders  p51
13 institutional shareholders  p51
14 analyst coverage  p52
15 annual general meeting  p52
16 major shareholdings  p53
17 analysis of ordinary shareholdings at 
29 february 2012  p53
18 remuneration of nonexecutive directors 
 p59
19 remuneration policy for executive directors 
 p59
20 fixed versus variable remuneration  p60
21 elements of remuneration  p60
22 summary of executive directors’ 
remuneration  p61
23 summary of bonus scheme 2011  p62
24 ltip performance conditions  p63
25 directors’ minimum shareholding  p64
26 total shareholder return graphs  p64
27 directors service contracts notice periods 
and termination payments  p64
28 executive directors’ external appointments 
 p64
29 nonexecutive directors’ appointments 
 p65
30 directors’ emoluments  p66
31 directors’ shareholdings  p66
32 ltip awards  p67
33 conditional awards of shares to executive 
directors  p67
34 executive deferred bonus plan  p68
35 statement of compliance with the uk 
corporate governance code  p72
36 reelection of directors  p72
37 directors’ conflicts of interest  p72
38 internal control statement  p72
39 whistle blowing policy  p73
40 share capital  p73
 directors’ responsibilities statement  p7 4
 auditor’s report  p75
other committee letters
my colleagues chairing other board committees 
provide an overview of their activities this year as well 
these can be found as follows
audit committee  p54
nomination committee  p56
safety  environment committee  p57
remuneration committee  p58
44 diversity
on the more general issue of gender 
diversity the nomination committee 
of the board has reviewed the report 
of lord davies published in february 
201 1 on board room diversity national 
express is determined to ensure that 
all people – regardless of background 
or gender – are well represented at all 
levels of our business not only is that the 
right thing to do it is also good business 
practice therefore while maintaining 
our existing policy of selecting the best 
available candidates for any position 
national express is content to set the 
aspirational target that by 2015 30 of 
its board will be women in line with the 
recommendations of the davies report 
review of board performance
during 201 1 the board has conducted 
an externally facilitated review of its 
effectiveness which is reported on in more 
detail in the following sections of this report 
for us the use of an external facilitator has 
been a positive one an externally facilitated 
evaluation is not an opportunity for the 
company to be told by a third party what 
it should or should not be doing rather it 
is more about providing a process through 
which directors can speak candidly at 
length to our facilitator and in doing so 
analyse our performance over the past 
year the facilitator presents his findings 
to the board and it is then the board’s 
collective responsibility to discuss this  
and agree any actions required to improve 
our effectiveness
uk corporate governance code
for the first time this year we will be 
reporting against the uk corporate 
governance code that was brought  
into effect in may 2010
john devaney
chairman
29 february 2012
chris muntwyler – on the road
chris muntwyler chairman of the 
safety committee for national 
express visited uk operations for 
three days as part of his induction 
programme the programme 
is aimed at developing newly 
appointed directors’ understanding 
of the business and markets 
while simultaneously building 
relationships with group employees 
and customers being onsite 
offered chris an insight into the uk 
bus business’s potential although 
identifying prospective areas for 
growth are welcome outcomes  
of the induction programme  
chris stresses “surrounding all  
of this activity is our drive to 
improve safety”
at national express 
we seek to make good 
governance an integral 
part of our business 
philosophy
board gender split 2011
male  90
female  10
board gender split – target 2015
male  70
female  30
45
governance 
chairman’s overview governance
overview of board of directors
john devaney 
chairman
joaquín ayuso
nonexecutive director
jez maiden
group finance director
sir andrew foster
nonexecutive director
dean finch
group chief executive
miranda curtis
nonexecutive director
the board is regularly reviewed to ensure that the mix of skills and experience is 
appropriate to meet the current needs of the group an overview of the directors’ 
experience is summarised below
1
name
positioncommittee 
membership age
length of service  
as at 31 december 2011 independent
public board 
experience
operational 
experience
international 
experience
legalma 
experience
finance 
experience
government
regulatory 
experience commentary
john devaney chairman 
nomination chair 
safety  environment
65 2 years 8 months na ü ü ü ü ü ü •	senior management and operational experience
•	extensive board experience at a range of major organisations
•	industrial and infrastructure experience
joaquín ayuso safety  environment 56 6 months ü ü ü ü ü ü ü •	significant board experience at senior level
•	extensive knowledge of the transportation industry in both continental  
europe and internationally
miranda curtis remuneration chair 
safety  environment
56 3 years 6 months ü ü ü ü ü ü •	significant board experience eg liberty global telewest and flextech
jorge cosmen deputy chairman 
nomination  
safety  environment
43 6 years 1 month na ü ü ü ü ü ü •	expertise in transportation industry
•	key shareholder representative
sir andrew foster audit  
safety  environment 
nomination
67 7 years 4 months ü ü ü ü ü ü •	significant public sector and infrastructure experience
chris muntwyler audit  
safety  environment 
chair
59 7 months ü ü ü ü ü ü •	extensive senior management experience in transport and logistics industries 
both in the uk and international
•	senior board experience both uk and international
lee sander remuneration 
safety  environment
55 6 months ü ü ü ü •	senior management and operational experience in the us transportation industry
•	significant experience at us government advisory level on transportation policy 
and management
tim score senior independent 
director  
audit chair 
remuneration  
safety  environment
51 6 years 10 months ü ü ü ü ü ü •	financial expertise from cfo positions
•	has acted as interim chairman
dean finch group chief executive 45 1 year 10 months na ü ü ü ü ü ü •	significant transportation experience
•	chartered accountant
jez maiden group finance 
director
50 3 years 1 month na ü ü ü ü ü ü •	significant financial expertise
•	chartered management accountant
46 tim score
senior independent director
jorge cosmen
deputy chairman
lee sander
nonexecutive director
michael hampson
company secretary
chris muntwyler
nonexecutive director
for detailed biographies of our board of 
directors and company secretary please 
go to nationalexpressgroupcom
aboutusourmanagement
or refer to your 2012 notice of agm
1
name
positioncommittee 
membership age
length of service  
as at 31 december 2011 independent
public board 
experience
operational 
experience
international 
experience
legalma 
experience
finance 
experience
government
regulatory 
experience commentary
john devaney chairman 
nomination chair 
safety  environment
65 2 years 8 months na ü ü ü ü ü ü •	senior management and operational experience
•	extensive board experience at a range of major organisations
•	industrial and infrastructure experience
joaquín ayuso safety  environment 56 6 months ü ü ü ü ü ü ü •	significant board experience at senior level
•	extensive knowledge of the transportation industry in both continental  
europe and internationally
miranda curtis remuneration chair 
safety  environment
56 3 years 6 months ü ü ü ü ü ü •	significant board experience eg liberty global telewest and flextech
jorge cosmen deputy chairman 
nomination  
safety  environment
43 6 years 1 month na ü ü ü ü ü ü •	expertise in transportation industry
•	key shareholder representative
sir andrew foster audit  
safety  environment 
nomination
67 7 years 4 months ü ü ü ü ü ü •	significant public sector and infrastructure experience
chris muntwyler audit  
safety  environment 
chair
59 7 months ü ü ü ü ü ü •	extensive senior management experience in transport and logistics industries 
both in the uk and international
•	senior board experience both uk and international
lee sander remuneration 
safety  environment
55 6 months ü ü ü ü •	senior management and operational experience in the us transportation industry
•	significant experience at us government advisory level on transportation policy 
and management
tim score senior independent 
director  
audit chair 
remuneration  
safety  environment
51 6 years 10 months ü ü ü ü ü ü •	financial expertise from cfo positions
•	has acted as interim chairman
dean finch group chief executive 45 1 year 10 months na ü ü ü ü ü ü •	significant transportation experience
•	chartered accountant
jez maiden group finance 
director
50 3 years 1 month na ü ü ü ü ü ü •	significant financial expertise
•	chartered management accountant
47
governance 
board of directors governance
corporate governance
4
  key governance and business matters
group strategy and risk management
•	 formulation and approval of longterm objectives
•	 approval of changes to capital structure
•	 approval of major changes to management and control structure
•	 approval of extension of activities into new businesses or geographical areas
financial and internal controls
•	 oversight of risk management and internal control framework
•	 approval of major accounting policies
•	 approval of financial statements and results announcements
•	 approval of shareholder communications circulars and notices of meetings
•	 approval of the auditor’s remuneration and recommendations  
for their appointmentremoval
•	 recommendation and declaration of dividends
•	 monitoring group’s businesses against plan and budget
•	 approval of major capital expenditure projects
•	 approval of material contracts
board membership remuneration and committees
•	 approval of the company’s remuneration policy and principles
•	 appointments of directors
•	 approval of remuneration of the executive and nonexecutive directors  
and senior management
•	 approval of the chairman’s fees
•	 setting of committee terms of reference
•	 approval of new share incentive plans
corporate governance
•	 undertaking of formal performance reviews of board committee  
and individual directors
•	 determining the independence of directors
•	 receiving reports from the company’s major shareholders
policies
•	 review and approval of group policies for example 
 – health and safety
 – risk management strategy
 –environment
 – charitable and political donations
the systems that the board has established are designed 
to safeguard both the shareholders’ investment and the 
assets of the group
2
  the role of the board
the board leads and controls the group 
within a sound governance framework  
the board is responsible for setting the 
group’s strategic aims its values and 
standards and ensuring the necessary 
financial and human resources are in place 
to achieve its goals to help discharge its  
key responsibilities the board has a defined 
list of key governance and business 
matters for which it is responsible as 
summarised opposite
in addition to the matters above which 
form the core of the board’s agenda the 
timeline on pages 52 to 53 shows the main 
items of business addressed by the board 
during the year
3
 the structure of the board
the board consists of a balance of 
executive and nonexecutive directors 
who collectively bring a strong and in
depth mix of business skills and experience 
and considerable knowledge to assist 
with board decisions a summary of the 
members of the board including the mix of 
skills and experience each director brings 
to the board is given on pages 46 to 47 
and full biographical details are included  
in the notice of agm
the full terms of reference of  
the principal committees are available  
on the company’s website at  
nationalexpressgroupcom
48 5
 independence
the board considers all of the 
nonexecutives to be independent other 
than jorge cosmen and considered john 
devaney to be independent prior to his 
appointment as chairman jorge cosmen 
is not considered to be independent by 
the board due to his close links with the 
alsa business and significant interests in 
the shares of the company which are held 
through european express enterprises 
limited despite his nonindependence 
the board feels that it benefits greatly  
from jorge cosmen’s extensive local 
market knowledge and experience  
nonexecutive directors do not participate 
in any of the company’s share option 
or bonus schemes and their service is 
nonpensionable
6
 principal committees of the board
the principal committees established by 
the board are the audit committee the 
remuneration committee the nomination 
committee and the safety  environment 
committee each committee has defined 
terms of reference and reports on its 
proceedings to the board in addition there 
is an executive committee with authority 
to approve routine matters of business 
and a tax and treasury committee which 
reviews the group’s tax planning banking 
facilities and treasury reports all of the 
committees are authorised to obtain legal 
or other professional advice as necessary 
to secure the attendance of external 
advisors at their meetings and to seek 
information required from any employee  
of the company in order to perform  
their duties the full terms of reference  
of the principal committees are available 
on the company’s website at  
nationalexpressgroupcom 
the uk spain and north america 
executives meet on a monthly basis  
and matters dealt with at these  
meetings are reported to the group 
executive committee
the members of each principal committee 
and main duties are shown in each 
committee report on pages 54 to 58 
the table below sets out the number of 
meetings of the board and its committees 
during the year and individual attendance 
by the board and committee members 
at these meetings during the year the 
chairman met on several occasions with 
the nonexecutives without the executive 
directors present to allow informal 
discussions on a variety of issues
board meetings
the board  
of directors
audit  
committee
nomination 
committee
remuneration 
committee
safety  
environment 
committee
total meetings in 201 1 11 4 5 3 4
executive directors
dean finch group chief executive 11 – – – –
jez maiden group finance director 11 – – – –
nonexecutive directors
john devaney 11 – 5 – 4
joaquín ayuso
2
3 5 – – – 1 2
jorge cosmen 11 – 5 – 4
miranda curtis 11 – – 3 4
roger devlin
1
6 7 1 2 – 1 1 2 2
sir andrew foster 11 4 5 – 4
chris muntwyler
3
5 6 1 1 – – 3 3
lee sander
2
3 5 – – 1 1 1 2
tim score
4
10 1 1 4 – 3 4
company secretary michael hampson also acts as secretary to the board committees
1
 resigned from the board on 28 june 2011 maximum possible meetings shown in brackets 
2
 appointed to the board on 1 june 2011 maximum possible meetings shown in brackets 
3
 appointed to the board on 11 may 2011 maximum possible meetings shown in brackets 
4
 tim score was unable to attend an unscheduled board meeting on 8 september 2011 due to a prior engagement
management structure
the main committees of the board are the 
audit safety  environment remuneration 
and nomination committees
the uk spain and north america 
executives report to the group  
executive committee
 board committee
 executive committee
audit committee share allotment committee
remuneration committee
nomination committee
safety  environment committee
group board tax committee
treasury committee
spain
executive
north america
executive
uk
 executive
group executive committee
composition of the board
executive directors   2
nonexecutive directors 2
independent nonexecutive directors 6
49
governance 
corporate governance governance
corporate governance continued
9
 executive directors
the executive directors are responsible for 
the daytoday management of the group’s 
businesses implementation of its strategy 
policies and budgets and its financial 
performance executive management 
meetings involving the executive directors 
and senior management from the divisions 
are held regularly to discuss current issues
10
  information and professional 
development
reports from the executive directors 
which include indepth financial 
information are circulated to board 
members prior to every board meeting 
senior management and advisers give 
presentations to the board on significant 
matters during the year 
under the direction of the chairman the 
company secretary is responsible for 
ensuring board procedures are followed 
and applicable rules and regulations are 
complied with and advises the board on 
governance matters all directors have 
access to the advice and services of the 
company secretary and the appointment 
or removal of the company secretary is a 
matter for the board as a whole there is a 
procedure in place for any director to take 
independent professional advice where 
considered necessary
on appointment directors are offered 
training as appropriate and are thereafter 
encouraged to keep abreast of matters 
affecting their duties as a director and to 
attend training courses relevant to their 
role an induction process is in place for 
new directors the aims of which are to
chairman’s responsibilities
•	chairing	and	managing	the	business	of	the	board
•	together	with	the	group	chief	executive	leading	the		
board	in	developing	the	strategy	of	the	business	and	
ensuring	its	effective	implementation	by	the	executive	
management	team
•	ensuring	effective	dialogue	with	investors	concerning	
mutual	understanding	of	objectives
•	in	conjunction	with	the	nomination	committee	taking	
responsibility	for	the	composition	and	replenishment		
of	the	board
•	periodically	reviewing	with	the	board	its	working	practices	
and	performance
•	ensuring	there	is	an	effective	contribution	from	the	
non‑executive	directors	and	a	constructive	relationship	
between	the	executive	and	non‑executive	directors
group chief executive’s responsibilities
•	communicating	a	shared	purpose	and	the	culture	vision		
and	values	of	the	group
•	the	development	and	implementation	of	management	
strategy
•	the	day‑to‑day	management	of	the	group
•	managing	the	executive	management	team
•	fostering	relationships	with	key	stakeholders
•	leading	the	group	executive	committee
•	in	conjunction	with	the	group	finance	director	
communicating	the	group’s	financial	performance	to	
investors	and	analysts
•	liaising	with	the	chairman	to	ensure	effective	dialogue		
with	investors	and	stakeholders
7
  the chairman and the group  
chief executive
the roles of chairman and group chief 
executive are held separately the 
chairman is responsible for leading the 
board and ensuring its effectiveness the 
group chief executive is responsible for the 
leadership of the group and implementation 
of the strategy and policies adopted by 
the board the division of responsibilities 
between the chairman and group chief 
executive is shown in the table below
8
 senior independent director
the board appoints one of the 
nonexecutive directors to act as senior 
independent director and this role has 
been held by tim score since april 
2009 the role of the senior independent 
director is to provide a sounding board 
for the chairman and to serve as an 
intermediary for the other directors where 
necessary the senior independent 
director is also available to address 
shareholders’ concerns if they have been 
unable to resolve these through normal 
channels or when such channels would be 
inappropriate during the year the senior 
independent director has discussed 
the performance of the chairman with 
the nonexecutive directors and has 
participated in meetings with significant 
institutional investors
seeing the front line 
by sir andrew foster 
nonexecutive directors spend 
masses of time reading board 
papers and helping to develop 
strategy and challenge performance
all valuable stuff but it can be much 
helped by seeing the sharp end of 
service delivery i visited our school 
yellow bus service centre in chicago 
meeting drivers mechanics 
dispatchers safety trainers and 
managers nothing beats chatting 
with the staff understanding 
operational issues safety concerns 
and how to link well with students 
and schools there was tremendous 
spirit and motivation behind their 
work to renew their contract 
after this i spent a day with ten 
ceos of school boards talking 
about how our student transport 
services could be improved school 
boards are squeezed financially 
and are seeking sustained service 
levels at lower cost it was satisfying 
to explore joint ways we can work 
through tough economic times 
protecting safe service delivery
the chance to meet front line staff 
students and ceos adds to report 
understanding and demonstrates 
support both ways a number of 
staff commented “it is good to 
know that there is real interest and 
understanding at board level”
50 •	 build an understanding of the nature  
of the company its business and the 
markets in which it operates
•	 establish a link with the group’s 
employees and
•	 build an understanding of the group’s  
main relationships including 
stakeholders and customers
for example as part of chris muntwyler’s 
introduction to the group he spent three 
days visiting uk operations
11
 performance evaluation
formal evaluation of the board’s 
performance is periodically carried out an 
internal evaluation was commenced in late 
2010 and completed in the first quarter of 
201 1 the board review concluded that 
generally the board was considered to be 
working very well the board felt that it was 
receiving high quality information to aid  
its decisionmaking both in terms of the 
board papers and specialist information 
provided board committees were also 
felt to be generally wellmanaged the 
findings of the evaluation report resulted 
in a number of recommendations for 
improvement in the way the board 
operates examples of which are shown  
in the table below
in late 201 1 the board commenced an 
externally facilitated board review process 
structured meetings were held with each 
nonexecutive director and the company 
secretary and during the meetings the 
following areas were considered
•	 balance of skills and experience
•	 independence and knowledge  
of the company
•	 diversity including gender
•	 how the board works together as  
a unit and
•	 other factors relevant to its effectiveness
following this individual draft meeting 
reports were circulated for individual 
directors to sign a draft omnibus report 
was then prepared for discussion by 
the chairman and company secretary 
prior to submission of a final report 
for debate at the board action plans 
are being developed based on the 
outcome of the evaluation process and 
the recommendations and outcomes 
arising from the evaluation process will be 
reported on in next year’s annual report
12
 relations with shareholders
the board recognises the importance of 
maintaining good communications with the 
company’s shareholders to ensure mutual 
understanding of the group’s strategy 
objectives governance and performance
during the year shareholders are kept 
informed of the progress of the group 
through regular corporate communications 
the preliminary announcement the notice 
of agm interim management statements 
and press releases regarding any other 
significant developments as well as the 
dissemination of regulated information 
such communications are made available 
to the london stock exchange and 
simultaneously available on the company’s 
website nationalexpressgroupcom  
the company’s website houses wide
ranging information about the group 
including the annual report and accounts 
press releases share price data and links 
to subsidiary company websites
from time to time the company invites 
research analysts and institutional investors 
to presentations and site visits that are 
designed to provide more understanding 
of the strengths and capabilities of its 
business operations and strategy in 201 1 
the company held an analyst and investor 
event in madrid as well as hosting a visit to 
school bus operations in the usa
the company has introduced an electronic 
communications facility to enable 
shareholders to receive documentation 
such as the annual report and accounts 
electronically and also to cast their votes 
by proxy electronically the company 
has also introduced an electronic proxy 
appointment service for crest members
13
 institutional shareholders
the chairman group chief executive 
and group finance director have 
held a number of meetings with 
existing and prospective institutional 
shareholders during the year as well 
as given presentations following the full 
year and halfyear results they have 
also met and given presentations to 
research analysts and stockbrokers’ 
sales teams the company’s appointed 
brokers and investor relations advisors 
in turn have provided regular confidential 
feedback to the company on the views 
of the major institutions the chairman 
senior independent director and other 
areas for improvement actions taken
•	 the 2012 schedule of board meetings should be reviewed 
to ensure a more regular pattern and a closer link to the 
company’s reporting and events calendar
a review was undertaken and the schedule of meetings was 
adjusted as proposed
•	 additional nonexecutive directors should be appointed to the 
board to add north american and european experience and 
expertise and strengthen the breadth of skills and experience 
around the board table
search consultants were briefed and a shortlist of candidates 
was drawn up three highcalibre candidates were identified 
and appointed as nonexecutive directors to the board chris 
muntwyler appointed 1 1 may 201 1 joaquín ayuso appointed 
1 june 201 1 and lee sander appointed 1 june 201 1
•	 board papers should be circulated at least four days prior  
to the meeting two of which must be working days
board papers are now circulated according to the 
recommendation electronic dissemination of board papers  
is currently being trialled
•	 board members should not schedule other meetings on 
board days to remove some pressure from the schedule and 
enable time to be allocated to nonexecutive directors to meet 
on their own in advance of board meetings
board members are scheduling their commitments according 
to the recommendation
51
governance 
corporate governance 2011 january 
governance
corporate governance continued
nonexecutive directors are also given 
the opportunity to meet institutional 
shareholders and are available by contact 
through the normal channels during 201 1 
the chairman and senior independent 
director have both met with major 
shareholders to discuss the governance 
and direction of the company
the board is provided with regular updates 
on the views and issues raised by the 
company’s investors during the year the 
board received external presentations 
from advisors on shareholder and market 
perception of the group’s performance 
and strategy formal written responses 
are given to correspondence received 
from shareholders as well as bilateral 
engagement through the group chief 
executive group finance director and  
the company’s investor relations function
14
 analyst coverage
the company is aware of 21 analysts  
who have published equity research  
notes covering national express group 
plc during 201 1 and we provide names 
and contact numbers of their firms on  
our website
board oversight and benchmarking
•	 the board regularly and rigorously 
reviews and benchmarks 
operational and functional 
performance
•	 at each board meeting the board 
receives a report from the group 
chief executive on operational 
performance and from the group 
finance director on the financial 
performance of the group as a 
whole and each of the group’s 
businesses individually
•	 the board receives a presentation  
at each of its meetings from either  
a business managing director  
or a functional head
board activity throughout the year
review of strategic fiveyear plan presentation on uk bus business
review of nonexecutive directors’ fees
review of board and committee terms  
of reference
review of dividend policy
approval of full year results
recommendation of final dividend
approval of appointment of new  
auditor deloitte llp
review and approval of group  
antibribery act policy
consideration of shortlisted 
nonexecutive director candidates
preagm engagement with  
major shareholders
appointment of chris muntwyler  
as a nonexecutive director
visit to spain and meetings with local 
management
presentation on spanish business
internal review of board effectiveness
for more information on our strategy 
please go to nationalexpressgroup
cominvestors
 private shareholders
we welcome contact from our private 
shareholders and are pleased to answer 
their queries by telephone or through our 
website at nationalexpressgroupcom 
we encourage our shareholders to make 
use of our website to access company 
reports notices of meeting and general 
shareholder and dividend information 
the website also provides a direct link to 
shareview shareviewcouk which enables 
shareholders to view and manage their 
shareholder account online
15
 annual general meeting
notice of the agm and related papers are 
sent to shareholders at least 20 working 
days before the meeting last year’s agm 
included a presentation by the group chief 
executive on the progress of the business 
and an opportunity for shareholders to ask 
questions all our directors were available 
formally to answer questions during the 
meeting and many circulated and talked to 
shareholders informally afterwards voting 
on the resolutions was conducted by poll 
some 85 of the shares in issue were 
voted and the resolutions were passed 
the results are published on the group’s 
website shortly after the meeting
we look forward to welcoming 
shareholders to our 2012 agm and 
updating them on the progress of the 
business this year
the board has a regular schedule of meetings and convenes additional meetings as 
required details of the number of meetings held and attendance at these meetings is  
on page 49 the average attendance rate of the members of the board in 201 1 was 93
2011 february
2011 april 
2011 may 
2011 march 
52 2011 january 
key to board business
2011 june 
2011 september 
appointments of joaquín ayuso and  
lee sander as nonexecutive directors
presentation on north american business review of proposal to acquire 
petermann and approval to proceed
review and approval 
2012 budget
proposal for interim dividend
review of spanish fleet replacement 
programme
update on group staff pension plan
treasury policy update
review of halfyear financial 
statements
review of nonexecutive 
director fees excluding 
the chairman
review of executive 
directors’ and senior 
executives’ salaries
review of north american business
review of opportunities in german 
rail market
review of group insurancesstructure
review of potential acquisition pricing and 
due diligence and approval to proceed
review of board committee membership
review of preclose statement for half year 
results
major shareholdings
as at 29 february 2012 the company had been notified of the following interests in its shares which represent 3 or more of the voting 
rights in the company
ordinary  
shares
percentage of 
share capital
nature of  
holding
elliott international lp liverpool ltd partnership 97269654 1907 direct 
european express enterprises ltd 87 095062 1708 direct 
prudential plc 61189177 1199 direct 
legal and general group plc 18564889 364 direct 
norges bank 15309775 300 direct 
the holdings for european express enterprises ltd are included in jorge cosmen’s holdings which are shown in the directors’ 
remuneration report on page 66
analysis of ordinary shareholdings  
at 29 february 2012 
number of  
accounts
percentage of  
total number  
of accounts
number of  
shares 
percentage  
of ordinary  
capital
by size of holding
1500 6712 4847 989929 019
5011000 1782 1287 1400537 027
10015000 3669 2650 8498369 166
500150000 1452 1049 16962385 332
500011000000 169 122 40970053 801
over 1000000 62 045 442904753 8655
13846 10000 511726026 10000
by investor type
individuals 13004 9392 25203485 492
institutional investors 734 530 469126475 91 68
other corporate investors 108 078 17396066 340
13846 10000 511726026 10000
 
  group strategy and  
risk management 
  financial and  
internal controls 
  b o a r d m e m be r sh i p  
remuneration and committees 
  corporate 
governance 
  review and approval  
of group policies
2011 may 
2011 august
2011 july
2011 october
2011 november
16
 
17
 
53
governance 
corporate governance governance
audit committee overview
dear shareholder
2011 has seen the company continue to build upon the progress made  
in 2010 as reflected in the results presented to you in this document 
given	the	length	of	time	since	the	role	of	external	auditor	had	been	put	out	to	
tender	it	was	agreed	that	the	time	was	opportune	to	tender	the	position	early	
in	2011	an	invitation	to	tender	was	issued	to	four	major	accounting	firms	and	
following	this	process	deloitte	llp	was	appointed	as	the	company’s	auditor	on	
14 june	2011	following	the	resignation	of	ernst	and	young	llp	on	10	june	2011
the	audit	committee	supported	by	senior	management	conducted	a	rigorous	
tender	process	focussing	on	quality	resources	independence	and	value	the	
tendering	firms	were	invited	to	put	forward	a	proposal	to	the	audit	committee	
following	briefing	meetings	with	key	management	and	the	audit	committee	
chairman	following	the	review	of	these	proposals	by	management	and	the	
audit	committee	chairman	and	after	careful	consideration	the	audit	committee	
concluded	that	the	proposal	from	deloitte	llp	was	the	best	overall	in	terms	of	
quality	resources	independence	and	value	and	would	better	meet	the	group’s	
requirements	for	external	audit	services	going	forward	
the	audit	committee	therefore	recommended	to	the	board	that	deloitte	llp		
be	appointed	as	the	group’s	external	auditor
the	committee	has	no	set	policy	on	the	tendering	frequency	of	their	external	
auditor	or	of	the	tenure	of	their	external	auditor	but	will	ensure	that	good	corporate	
governance	is	maintained	and	that	the	committee	is	regularly	considering		
the	marketplace	benchmarking	the	current	level	of	service	the	company		
receives	along	with	the	fees	they	pay	and	the	value	being	delivered	there	were		
no	contractual	obligations	that	acted	to	restrict	the	committee’s	choice	of		
external	auditor
i	would	like	to	take	this	opportunity	to	thank	ernst		young	for	their	many		
years	of	excellent	service	to	the	company	and	to	welcome	deloitte	as	the	
company’s	auditor
in	2011	the	committee	dealt	with	its	usual	programme	of	business	as	well	as	a	
range	of	new	issues	such	as	the	company’s	new	anti‑bribery	policy	envisaged		
in	my	letter	to	you	last	year	to	ensure	compliance	with	the	bribery	act	2010		
this	policy	together	with	new	whistle	blowing	arrangements	is	now	in	place		
and	compliance	with	the	policy	will	be	monitored	going	forward	
for	the	first	time	in	a	number	of	years	there	has	been	a	change	to	the	membership	
of	the	committee	following	roger	devlin’s	retirement	from	the	board	chris	
muntwyler	has	joined	the	committee	bringing	it	back	to	full	strength	and	keeping		
it	in	compliance	with	the	uk	corporate	governance	code
tim score  
audit committee chairman
29	february	2012
main activities during the year
during	the	year	the	committee	
considered	the	following
•	oversight	of	the	tender	and		
selection	process	for	the	role		
of	external	auditor
•	review	of	compliance	with	the		
uk	corporate	governance	code
•	review	and	update	of	the	
committee’s	terms	of	reference
•	approval	of	the	group’s		
anti‑bribery	policy
•	review	of	the	group	risk	register
•	review	of	uk	data	protection		
act	compliance
•	review	and	update	of	policy		
on	provision	of	audit	and		
non‑audit	services
•	consideration	of	the	results	of	
internal	audit	compliance	testing		
of	financial	controls	annual	fitness	
checks	within	the	subsidiaries	
•	review	of	the	external	auditor’s	fees
•	review	of	financial	accounts	and	
accounting	policies
tim score
the audit committee is confident 
that the group has a wellestablished 
governance structure with full control 
and direction over appropriate 
strategic financial operational  
and compliance issues 
 
54 audit committee
name of director position
tim score chairman senior 
independent director
roger devlin nonexecutive 
director resigned 
28 june 201 1
sir andrew foster nonexecutive 
director
chris muntwyler nonexecutive 
director appointed 
21 november 201 1
the role of the audit committee
the duties of the committee are those 
delegated to it by its terms of reference 
details of which are summarised below
•	 oversees the process for selecting 
the external auditor assesses the 
continuing independence of the external 
auditor and recommends approval of 
the audit fee to the board
•	 responsible for ensuring that provision 
of nonaudit services does not impair  
the external auditor’s independence  
or objectivity
•	 discusses with the external auditor the 
nature and scope of the audit and any 
issues or concerns arising from the  
audit process
•	 reviews effectiveness of the 
company’s internal control and risk 
management systems including the 
internal audit programme and major 
findings identified from internal audit 
investigations and reviews and
•	 reviews the halfyear and annual 
financial statements including 
accounting judgements and policies
the committee met four times in 201 1 
the committee’s agenda reflects the 
duties delegated to it by its terms of 
reference there are a number of standing 
items considered during the year such as 
consideration of the internal and external 
audit reports review of the annual report 
and accounts review of the preliminary 
and halfyear announcements and review 
of the corporate governance report
at the invitation of the committee and 
as appropriate to the matters under 
discussion meetings may be attended by 
the executive directors and internal and 
external auditors full minutes are kept by 
the secretary of the matters considered 
and decisions taken by the committee 
outside of the meeting process the 
committee chairman has regular contact 
with the executive directors other 
committee members and the auditors 
on a variety of topics
review of independence  
of external auditor
the audit committee assesses 
and reviews on a regular basis the 
independence of the external auditor 
as part of their determination the 
audit committee considers a report 
by the external auditor on the firm’s 
independence which is required in order 
to carry out their professional duties and 
responsibilities as auditor 
policy on auditor providing  
nonaudit work
the committee has an approved policy  
on the provision of nonaudit services by  
its auditor for the following types of service
•	 services that are considered to have 
‘general preapproval’ by the audit 
committee by virtue of the approval  
of the policy
•	 services that require ‘specific pre
approval’  on a casebycase basis 
before any work can commence and
•	 services that cannot be supplied by the 
external auditor ‘prohibited services’
the services that have general pre
approval are tax transaction investigation 
and advisory and corporate finance 
services the fees for these services are 
preapproved up to £50000 for each non
audit assignment undertaken and subject 
to an overall limit of 75 of the total fees 
paid to the external auditor for services 
exceeding this limit specific preapproval  
is required
in deciding whether or not to grant 
approval for the provision of specific 
services by the external auditor the audit 
committee includes in its consideration the 
following factors
i  whether the external auditing firm is 
best placed to provide an effective and 
efficient service given its familiarity with 
the company’s processes systems 
and people and
ii  the level of nonaudit fees paid to  
the external auditor in the year as  
a proportion of the annual external  
audit fee
the majority of nonaudit work undertaken 
by the external auditor during the year 
relates to advice in respect of tax advisory 
and other regulatory services these 
items the committee believes would be 
impractical and costly to provide through 
another party
55
governance 
committee reports governance
nomination committee overview
dear shareholder
2011 has been a busy year for the nomination committee in the early part  
of the year as indicated in my letter to you last year the committee reviewed 
the existing balance of skills and experience on the board and concluded 
that additional expertise of continental european and north american 
markets would further strengthen the board going forward 
the	committee	then	undertook	an	externally	facilitated	search	process	to	identify	
suitable	candidates	i	am	pleased	to	report	to	you	that	the	search	was	successful	
in	identifying	three	exceptional	candidates	in	joaquín	ayuso	chris	muntwyler	and	
lee	sander	all	of	whom	we	have	now	appointed	as	independent	non‑executive	
directors	of	your	company
the	committee	has	also	undertaken	further	work	on	reviewing	the	succession	
plans	for	the	senior	executive	roles	within	the	company’s	management	together	
with	the	development	plans	in	place	for	such	executives	to	seek	to	ensure	that	
when	the	need	arises	good	internal	candidates	are	available	to	compete	for	board	
and	senior	management	positions
we	have	also	considered	the	issue	of	diversity	this	year	the	committee	has	
recommended	to	the	board	that	it	should	retain	its	existing	policy	of	seeking	to	find	
the	very	best	candidate	for	any	board	level	position	irrespective	of	the	gender	of	
that	candidate	however	the	committee	recognises	that	diversity	at	board	level	is	
a	positive	thing	and	so	the	board	has	set	an	aspirational	target	that	by	2015	30	
of	its	members	will	be	women	in	line	with	the	recommendations	of	the	davies	
report	published	in	early	2011
in	2012	the	committee	will	continue	to	assess	the	balance	of	skills	experience	
knowledge	and	expertise	of	the	board	to	ensure	it	continues	to	meet	the	needs		
of	the	company	going	forward
john devaney 
nomination committee chairman
29	february	2012
the role of the nomination committee
the key responsibilities of the nomination 
committee are summarised below
•	 responsible for identifying and 
nominating for the approval of 
the board candidates to fill board 
vacancies as and when they arise
•	 gives full consideration to succession 
planning and keeps under review the 
leadership needs of the organisation 
both executive and nonexecutive
•	 reviews the time required from a 
nonexecutive director and uses 
performance evaluation to assess 
whether the nonexecutive director  
is spending enough time on fulfilling 
their duties
•	 leads the process for board 
appointments and makes 
recommendations to the board and
•	 prepares a description of the role 
and requirements for any particular 
appointment based on its evaluation  
of the board as a whole
the terms and conditions of appointment 
of the nonexecutive directors are available 
for inspection at the company’s registered 
office during normal business hours and at 
the agm of the company and are available 
on the company’s website the non
executive directors disclose to the board 
their other significant commitments the 
procedures adopted by the company in 
relation to directors’ conflicts of interest  
are detailed on page 72
external advisors are appointed when 
recruiting board members they use as 
a basis for their search a description of 
the role and capabilities required for a 
particular appointment proposed by the 
nomination committee
main activities during the year
during	the	year	the	committee
•	evaluated	the	balance	of	skills	
experience	independence	diversity	
and	knowledge	on	the	board	and	
then	prepared	a	description	of	the		
role	and	capabilities	required	for		
the	role	of	non‑executive	director
•	appointed	search	consultants	to	
identify	a	shortlist	of	candidates	
for	the	role	of	non‑executive	
director	and	interviewed	
candidates	following	which	three	
candidates	were	recommended	
for	appointment	joaquín	ayuso	
chris muntwyler	and	lee	sander
•	considered	lord	davies’	report	on	
diversity	published	in	february	2011	
and	recommended	the	board	adopt	
the	aspirational	target	that	by	2015	
30	of	the	board	should	be	women
•	the	chairman	as	chairman	of	the	
nomination	committee	appointed	
search	consultants	to	draw	up	a	
shortlist	of	candidates	for	the	role	
of	group	company	secretary	and	
interviewed	candidates	following	
which	michael	hampson	was	
appointed	on	30	january	2012	
•	reviewed	succession	planning	
across	the	group
john devaney
all candidates for board positions 
participate in a proper evaluation 
process managed by the nomination 
committee to ensure that the best 
candidates are appointed 
 
nomination committee
name of director position
john devaney chairman
sir andrew foster nonexecutive director
jorge cosmen nonexecutive director
56 governance
safety  environment committee overview
dear shareholder
i have recently taken over the chair of the safety  environment committee  
and would like to thank miranda curtis for overseeing the many initiatives  
that were commenced during her time as chair of this committee 
safety	is	important	in	any	business	but	it	is	particularly	so	in	this	company	
seeking	to	ensure	the	safety	of	our	employees	and	customers	is	both	morally	
and	financially	correct	it	is	for	this	reason	that	the	board	has	a	special	committee	
dedicated	to	this	issue	in	my	view	it	is	imperative	that	leadership	from	the	top	is	
shown	in	this	area	if	a	concern	for	safety	is	to	be	taken	seriously	within	a	business	
and	i	would	like	to	commend	dean	finch	for	the	leadership	he	and	his	executive	
team	have	shown	in	keeping	this	issue	at	the	very	top	of	the	company’s	agenda
during	201 1	the	committee	has	been	monitoring	the	progress	of	the	‘driving	out	
harm’	programme	referred	to	by	miranda	in	her	letter	to	you	last	year	excellent	
progress	has	been	made	in	many	areas	and	the	committee	is	committed	to	ensuring	
that	this	progress	is	consolidated	and	built	upon
the	committee	has	once	again	this	year	been	paying	particular	attention	to	
the	company’s	operations	in	morocco	which	in	some	regards	present	the	
most	challenges	from	a	safety	perspective	i	am	pleased	to	report	that	the	
recommendations	of	the	original	arthur	d	little	adl	review	referred	to	last	year	
have	now	been	fully	implemented	and	a	further	review	and	audit	undertaken	by	
adl	showed	significant	progress	made	by	the	management	team	in	improving	
driver	competence
during	the	year	the	committee	also	approved	a	new	environmental	policy	for	the	
group	and	reviewed	plans	for	a	new	corporate	environmental	framework
chris muntwyler 
safety  environment committee chairman
29	february	2012
the role of the safety  environment committee
the key responsibilities of the committee 
are summarised below
•	 responsible for reviewing and 
challenging constructively the structure 
content and operation of the safety 
management arrangements put  
in place by members of the  
executive management of the  
group’s operating companies
•	 reports periodically to the board its 
observations on the safety management 
arrangements in place and reviews and 
makes recommendations to the board 
on any specific safety management 
issues relating to the group or any 
subsidiary company and
•	 reviews and monitors the company’s 
environmental performance and targets
main activities during the year
during	the	year	the	committee
•	approved	the	launch	of	the	group’s	
global	safety	standards
•	reviewed	progress	on	
implementation	of	the	group’s	
driving	out	harm	initiative
•	commissioned	an	independent	
review	of	safety	in	morocco	and	
monitored	its	recommendations
•	visited	group	locations	to	review	
safety	practices	and	procedures
•	reviewed	the	group’s	environment	
strategy	plan
•	considered	the	group’s	safety	kpis
safety  environment committee 
name of director position
chris muntwyler chairman appointed 
25 july 201 1
miranda curtis nonexecutive 
director
jorge cosmen nonexecutive 
director
roger devlin nonexecutive 
director resigned 
28 june 201 1
john devaney nonexecutive 
director
sir andrew foster nonexecutive 
director
tim score senior independent 
director
chris muntwyler
safety is important in any business 
but it is particularly so in this 
company seeking to ensure the 
safety of our employees and 
customers is both morally and 
financially correct 
 
 
57
governance 
committee reports governance
remuneration committee overview
dear shareholder
this is my first letter to you as chairman of the remuneration committee a role 
i took over when roger devlin left the board during 201 1 i would like to thank 
roger for his contribution during his time as chair of the committee
as	in	previous	years	the	committee	has	been	very	conscious	of	the	continuing	focus		
of	both	individual	and	institutional	investors	on	the	issue	of	executive	remuneration	
i	and	my	fellow	non‑executive	directors	on	the	remuneration	committee	are	very	
aware	of	the	continuing	need	to	ensure	the	company’s	remuneration	policies	and	
practices	are	in	line	with	best	practice	whilst	at	the	same	time	ensuring	that	our	highly	
regarded	management	team	are	retained	and	rewarded	appropriately	for	the	delivery	
of	the	company’s	strategic	objectives
this	year	the	committee	did	undertake	its	usual	review	of	remuneration	including	
considering	the	results	of	an	independent	benchmarking	of	executive	salaries	
and	the	non‑executive	chairman’s	fees	however	in	view	of	the	current	macro‑
economic	environment	in	which	we	are	operating	and	the	company’s	determination	
to	control	costs	all	board	members	both	executive	and	non‑executive	have	
decided	to	freeze	their	current	salary	and	fee	levels	for	2012	notwithstanding	the	
potential	for	increases	noted	as	a	result	of	the	committee’s	review	process
the	committee	considers	that	the	bonuses	awarded	to	the	executive	directors		
for	201 1	to	be	justified	given	the	company’s	financial	performance	in	201 1		
bonuses	were	paid	at	100	of	the	maximum	for	the	chief	executive	and	100		
of	the	maximum	for	the	finance	director	with	these	bonuses	arising	as	a	result	of		
a	growth	in	normalised	profit	of	10	continuing	improvement	in	the	group’s	margin	
and	the	substantial	progress	achieved	against	specific	key	strategic	objectives
with	regard	to	future	remuneration	policy	the	committee	believes	that	the	long	term	
incentive	and	bonus	structures	agreed	for	2012	to	be	appropriate	and	as	such	will	
properly	incentivise	the	executive	directors	to	achieve	the	company’s	mid‑	and		
short‑term	objectives
miranda curtis
remuneration committee chairman
29	february	2012
role of the remuneration committee
the key responsibilities of the committee 
are to
•	 determine the fees of the chairman
•	 determine the remuneration and 
conditions of employment including 
any termination arrangements of the 
executive directors
•	 approve the remuneration and conditions 
of employment of the divisional chief 
executives and company secretary
•	 review the remuneration and conditions  
of employment of the senior 
management team and
•	 select and appoint any remuneration 
consultants who advise the committee
the full terms of reference of the committee 
are available on the company’s website at  
nationalexpressgroupcom 
the members of the committee 
who served during the year were all 
independent directors
main activities during the year
during	the	year	the	committee	
considered	the	following	items		
of	business
•	executive	directors’	and	senior	
executives’	salary	levels
•	annual	bonus	scheme	terms	for	2011
•	review	of	the	non‑executive	fees
•	performance	targets	to	apply	to	the	
201 1	long	t erm	incentive	plan	awards	
including	the	total	shareholder	return	
comparator	group	used	and	the	range	
of	earnings	per	share	targets	set
•	2011	award	levels	under	the	
company’s	share	plans
•	recruitment	packages	for	new		
senior	executives
•	testing	of	performance	conditions	
and	vesting	of	long	term	incentive	
plan	awards	granted	in	2008
•	long	term	incentive	plan	
entitlements	upon	redundancy
•	outline	of	2012	bonus	scheme
miranda curtis
we are very aware of the continuing 
need to ensure the company’s 
remuneration policies and practices 
are in line with best practice whilst  
at the same time ensuring that our 
highly regarded management team 
are retained and rewarded 
appropriately 
 
remuneration committee
name of director position
miranda curtis chairman
roger devlin nonexecutive director 
resigned 28 june 2011
lee sander nonexecutive 
director appointed 
to the committee 
22 november 2011
tim score senior independent 
director
management attendees
dean finch group chief executive
stephen connock mbe group hr director
michael hampson general counsel and 
company secretary
58 governance
directors’ remuneration report
the committee members and 
management attendees did not participate 
in any discussions directly relating to 
their own remuneration or performance 
during the year this report sets out the 
policy for the financial year just ended 
for the forthcoming year and subject to 
ongoing review for subsequent years the 
report has been approved by the board 
and the remuneration committee the 
‘committee’ shareholders will be invited 
to approve the report at the 2012 agm
 advisors to the committee
the committee has appointed 
independent remuneration consultants 
new bridge street nbs to advise on all 
aspects of senior executive remuneration 
nbs has no other connection with the 
group other than in the provision of  
advice on executive and employee 
remuneration and nor does its ultimate 
parent aon corporation
18
  remuneration of nonexecutive 
directors 
the fees of the nonexecutive directors 
are set by the board as a whole and 
those of the chairman are set by the 
remuneration committee in both 
cases following an annual review the 
review takes account of fees paid for 
similar positions in the market the time 
commitment required from the director 
estimated to be 100 days per year for the 
chairman and 20 days per year for the 
other nonexecutive directors and any 
additional responsibilities undertaken such 
as acting as chairman to one of the board 
committees or fulfilling the role of senior 
independent director nonexecutive 
directors are not eligible to receive pension 
entitlements or bonuses and may not 
participate in share option schemes 
  remuneration of nonexecutive directors 
2011  
£
2010  
£
chairman’s fee 225000 225000
nonexecutive director basic fee 45500 44000
senior independent director additional fee 5000 5000
committee chairman additional fee 10000 7 000
in late 201 1 the committee undertook its 
usual review of remuneration including 
considering the results of an independent 
benchmarking of executive salaries and the 
nonexecutive chairman’s fees however 
in view of the current macroeconomic 
environment and the company’s clear focus 
on cost control all board members both 
executive and nonexecutive agreed to 
freeze their current salary and fee levels for 
201 2 this freeze takes place notwithstanding 
the potential for increases noted as a result 
of the committee’s normal review process 
in taking this decision the board noted the 
groupwide salary increase budget which 
was set at 2 for 2012
19
   remuneration policy for  
executive directors
remuneration policy is based on  
the following broad principles set  
by the committee
•	 to provide a competitive remuneration 
package to attract and retain quality 
individuals
•	 to align remuneration to drive the overall 
objectives of the business
•	 to align the interests of management 
with the interests of shareholders and
•	 to provide the foundation for overall 
reward and remuneration beyond the 
specific roles falling within the direct 
remit of the remuneration committee
the objective of this policy is aligned 
with the recommendation of the uk 
corporate governance code on directors’ 
remuneration that is to provide a level 
of remuneration ‘to attract retain and 
motivate directors of the quality required 
to run the company successfully but 
avoid paying more than is necessary for 
this purpose a significant proportion of 
executive directors’ remuneration should 
be structured so as to link rewards to 
corporate and individual performance’
in implementing its policy the committee 
gives full consideration to the principles set 
out in the uk corporate governance code 
with regard to directors’ remuneration 
and due regard is given to the guidance 
issued by investor protection bodies and 
institutional investors more generally
remuneration policy is reviewed on an 
ongoing basis against the committee’s 
broad principles and in light of emerging 
best practice in corporate governance 
the committee believes that it continues 
to take into account the principles of 
sound risk management when setting 
pay a substantial proportion of the current 
remuneration packages of the executive 
directors is weighted towards longterm 
performance with annual bonus also the 
subject of part deferral into the company’s 
shares clawback provisions also apply 
in the event of a misstatement of the 
company’s results and a broad range 
of financial and nonfinancial targets are 
included in our incentive programmes 
appropriate liaison takes place between 
the remuneration and audit committees 
as part of an effective remuneration risk 
assessment process in line with the 
association of british insurers’ abi’s 
guidelines on responsible investment 
disclosure the committee ensures that 
the incentive structure for executive 
directors and senior management will not 
raise environmental social or governance 
esg risks by inadvertently motivating 
irresponsible behaviour more generally 
with regard to the overall remuneration 
structure there is no restriction on the 
committee which prevents it from taking 
into account corporate governance on 
esg matters and it takes due account of 
issues of general operational risk when 
structuring incentives the committee 
takes due account of remuneration 
structures elsewhere in the group when 
setting pay for the executive directors 
59
governance 
directors’ remuneration report for example consideration is given to the 
overall salary increase budget and the 
incentive structures that operate across 
the group 
the group operates a leadership and 
development programme which includes 
an appraisal system for directors 
and senior management in 201 1 
the appraisal system used balanced 
scorecards to assess performance 
against safety customer people and 
community objectives the results 
of the annual appraisal system are 
taken into consideration when setting 
remuneration levels
20
  fixed versus variable remuneration
a substantial proportion of the executive 
directors’ pay is performance related 
the charts below show the balance 
between fixed and performance related 
pay at target and maximum performance 
levels based on the elements of national 
express’s remuneration package set out 
overleaf maximum performance assumes 
achievement of maximum bonus and full 
vesting of shares under the ltip 
governance
directors’ remuneration report continued
21
  elements of remuneration
the components of the executive directors’ 
remuneration are summarised overleaf
 i basic salary
the salary of individual executive directors 
is reviewed at 1 january each year 
account is taken of the performance of the 
individual concerned together with any 
change in responsibilities that may have 
occurred and the rates for similar roles in 
two comparator groups of companies 
the comparator groups for the 201 1 
financial year were i a group of transport
leisure sector companies and ii a group of 
companies from the ftse mid 250 drawn 
from across all sectors the constituents 
of each group were selected to be broadly 
reflective of the size market capitalisation 
and turnover and complexity of national 
express at the time of completing 
the review for 2012 the comparator 
groups will be based on similar groups 
of transportleisure and general sector 
companies drawn from the ftse 250 
when considering pay increases for 2013 
in setting the executive directors’ 
remuneration due account is taken of the 
salary budget for the group as a whole 
and the policy that is applied across all 
employees when setting individual 
  fixed versus variable remuneration
2011 fixed and variable pay group chief executive at target and maximum performance levels
target
maximum
base salary
annual bonus
ltip performance and matching
0
20 40 60 80 100
2011 fixed and variable pay group finance director at target and maximum performance levels
target
maximum
base salary
annual bonus
ltip performance and matching
0
20 40 60 80 100
salary levels in line with this policy the 
performance of each executive director is 
taken into account along with the results 
of comparative benchmarking in light of 
these factors and after taking into account 
broader economic conditions salary levels 
are then set by the committee as noted 
earlier the board agreed that no increases 
in salary or fees levels would take place 
for 2012 given current macroeconomic 
conditions and the company’s clear focus 
on cost control 
 ii performance related bonus
the maximum potential bonus payable to 
executive directors in 201 1 was 125 of 
salary for dean finch and 1 125 of salary 
for jez maiden a maximum of 60 of 
salary was payable based on achievement 
against a sliding scale of challenging 
normalised profit targets the definition of 
normalised profit is set out in the glossary 
on page 153 and a maximum of 40 of 
salary was payable based on nonfinancial 
targets that encompassed customer 
operational excellence and people 
objectives to achieve standardisation 
of bonus structure across the group 
the split between financial and non
financial objectives was adjusted to 60 
financial objectives and 40 nonfinancial 
objectives for the executive directors 
60 22
 summary of executive director’s remuneration
element objective performance period policy
basic salary to position at a competitive  
level for similar roles within  
comparable markets
annually individual pay levels using comparable 
midmarket data for guidance as 
appropriate are determined by reference 
to the individual’s performance 
experience in post and potential
performance  
related bonus
to incentivise delivery  
of performance objectives
1 year bonus payments are based on the 
achievement of specified corporate 
60 financial and 40 nonfinancial 
objectives 25 subject to mandatory 
deferral into shares for one year  
from award
pension to provide competitive benefits  
in line with market practice and to  
act as a retention mechanism and 
reward long service
ongoing both executive directors are  
excluded from the pension  
scheme and are provided with a  
cash alternative with which they  
make their own arrangements  
only basic salary is pensionable
long term incentive 
plan
to drive performance aid retention 
and align the interests of executive 
directors with shareholders
3 years half of any award is subject to eps 
growth the remaining half is subject to 
the relative total shareholder return tsr 
of the company compared against a 
bespoke peer group
other benefits to provide competitive benefits in line 
with market practice
ongoing executive directors receive private health 
and longterm sickness insurance and a 
cash alternative to a fully expensed car 
share ownership 
guidelines
to align executive directors  
with shareholders
na a shareholding of 100 of current salary 
should be achieved within five years 
the additional maximum of 25 of salary 
available to the group chief executive 
and 125 of salary available to the group 
finance director was payable based on 
achievement against a challenging sliding 
scale of margin improvement targets 
the definition of margin is set out in the 
glossary on page 153 which along with 
normalised profit reflect the key shortterm 
financial objectives of the group 
in relation to the proportion of the bonus 
determined by performance against 
financial targets executive directors 
receive 25 of the bonus upon achieving 
95 of budget 50 of the bonus upon 
achieving budget and 100 upon 
achieving a stretch target which for 201 1 
was 1 10 of budget
the targets set in relation to non
financial performance are key strategic 
group objectives that are tailored to the 
responsibilities of each individual executive 
director and in aggregate are considered 
to be similarly challenging to the range of 
financial targets set in addition no bonus 
in respect of nonfinancial performance 
is payable unless 95 of the group’s 
normalised profit budget is achieved it 
is a precondition to the award of any 
bonus that the remuneration committee 
has determined that there has been a 
material improvement in safety processes 
procedures and outcomes during the year 
in the relevant business unit before any 
bonus is paid
bonuses are subject to a 25 deferral 
requirement into the company’s shares 
for a period of one year deferred shares 
are awarded under the executive deferred 
bonus plan edbp receipt of the deferred 
shares is subject to continued service and 
the same ‘good leaver’ provisions and 
other terms as noted for the long term 
incentive plan below the 201 1 bonus also 
included clawback provisions that require 
the deferred shares to be forfeited or repaid 
should it be necessary for the company 
to restate materially its 201 1 results within 
a two year period following the deferred 
bonus being awarded the proportion of 
the bonus that would be the subject to a 
clawback would depend on the extent to 
which the original bonus payment turned 
out to be false following the publication of 
corrected results 
in terms of an overview of the 201 1 bonus 
plan and the extent to which targets were 
met this is set out in the table overleaf
61
governance 
directors’ remuneration report as described in the table below bonuses 
were payable at 125 of salary for the 
group chief executive and 1 125 
of salary for the finance director in 
calculating these bonuses the committee 
considered the safety performance of the 
company and concluded that a continued 
improvement in safety processes 
procedures and outcomes during the year 
had been achieved
deferred bonuses awarded in 201 1 based 
on performance to 31 december 2010 
vested subject to the terms of the award 
on 25 february 2012 as set out in the table 
on page 68
for 2012 bonus payments will be based on 
a similar structure as detailed above any 
material changes to the company’s annual 
bonus policy for 2012 from the policy 
described above would as a minimum 
be disclosed and explained in next year’s 
directors’ remuneration report
governance
directors’ remuneration report continued
23
 summary of bonus scheme 2011
 of salary details achievement
maximum bonus potential group chief executive 125 
group finance director 1 125
25 of bonus subject to 
mandatory deferral into company 
shares for one year from award
group chief executive 
125 and group finance 
director 1 125
bonus potential at 95 of 
budgeted normalised profit 
before tax pbt
15
proportion of normalised 
profit budget achieved 
110
bonuses payable at 60  
of salary
on target bonus potential  
at 100 of budgeted 
normalised pbt
30 awarded on achieving budget
stretch bonus for 1 10 of 
budgeted normalised pbt 
60 awarded on achieving a stretch 
target of 1 10 of budgeted 
normalised pbt
margin improvement  
bonus potential 
0 to 25 of salary  
group chief executive
0 to 125 of salary  
group finance director
awarded by reference to 
challenging margin targets
margin targets achieved
bonuses payable at 25 
of salary for group chief 
executive and 125  
of salary for group  
finance director
nonfinancial targets 
underpinned by achievement 
of 95 of budgeted 
normalised pbt
40 awarded on meeting key 
strategic group objectives 
tailored to each executive 
director’s responsibilities 
targets achieved 100
bonuses payable at 40 
 notes 
  it is a precondition to the award of any bonus that the remuneration committee has determined that there has been a material improvement in safety processes 
procedures and outcomes during the year in the relevant business unit before any bonus is paid
   deferred shares would be required to be forfeited or repaid should it be necessary to restate materially the company’s 2011 results within a two year period following 
the award of the bonus the proportion of the bonus subject to clawback would depend on the extent to which the original bonus turned out to be false following the 
publication of corrected results 
   margin improvements in four out of five divisions and margins maintained in spain against a challenging macroeconomic backdrop
 iii pensions
under the terms of their service 
agreements executive directors are not 
entitled to become members of one of 
the group pension schemes instead they 
receive payment of a fixed percentage  
of salary dean finch receives a 35  
salary supplement and jez maiden 
receives a 25 salary supplement in  
lieu of pension contributions 
 iv incentive scheme and share options 
 a longterm incentive arrangements
the national express group long term 
incentive plan ‘ltip’ was approved 
by shareholders at the 2005 agm and 
operates as the company’s sole type of 
executive longterm incentive arrangement 
the ltip consists of annual awards of 
performance and matching shares  
details of the plan are provided below
the committee approved minor changes 
to the ltip during the year to allow a 
proportion of future awards to be made as 
approved share options under a hmrc 
approved option plan structure 
this change does not increase the gross 
benefit to the participant or the costs to  
the company or shareholders
 performance shares
executive directors are eligible to receive 
a conditional award of shares up to an 
equivalent of 100 of basic salary  
the vesting of the award is conditional  
on meeting the performance conditions  
set out below
 matching shares
executive directors are also eligible to 
receive awards of matching shares that are 
based on a personal investment in national 
express group plc shares funded either 
through using an annual bonus award 
to purchase shares or through pledging 
of shares held not already allocated to 
the ltip  matching awards are made on 
the basis of up to two matching shares 
being awarded based on the pretax 
value of the investment for each national 
express share pledged or purchased 
the maximum value of investment in any 
year is 30 of basic salary matching 
62 share awards are also conditional on the 
performance conditions set out below 
if a participant ceases employment before 
vesting for a ‘compassionate’ reason eg 
redundancy retirement death in service 
sale of business out of the company’s 
group hisher awards will ordinarily vest 
the extent of vesting will be determined 
by applying the relevant performance 
conditions to the date of cessation and 
scaling back the number of shares 
awarded on a pro rata basis rounded up 
to the next complete six month period from 
the date of grant unless the committee 
determines that it would be inappropriate 
to apply a pro rata reduction awards  
lapse on cessation of employment for  
any other reason
24
  ltip performance conditions
there are normally two distinct 
performance conditions applying to 
awards of both performance shares  
and matching shares made 
first the performance condition attached 
to onehalf of an award part ‘a’ is 
based on the company’s normalised 
diluted earnings per share eps growth 
performance in excess of inflation over 
a fixed threeyear period three financial 
years commencing with the financial year 
in which the award is made
 performance conditions for ltip awards granted in 2011 
part a of award – eps conditions part b of award – tsr conditions
eps for the financial year  
ending 31 december 2013
percentage of part a of the 
award that vests
rank of the company’s tsr  
as noted above
percentage of part b  
of the award that vests
less than 26 1p 0 below median 0
261p 30 median 30
293p 100 20th percentile 100
between 26 1p and 293p 30100 pro rata between median and 20th percentile 30100 pro rata
  indicative percentage of ltip awards vesting based on performance to 31 december 2011
year of award tsr element
1
eps element
1
total max 100
2009 8533 not applicable 8533
2010 3802 3740 7542
2011 3086 3750 6836
 1
 for 2009 tsr applies to 100 of the award for 2010 and 2011 tsr applies to 50 of the award and eps applies to 50 of the award
the performance condition attached to the 
other half of an award part ‘b’ is based 
on the company’s total shareholder 
return tsr performance over the same 
fixed threeyear period relative to the tsr 
performance of a bespoke comparator 
group of transport companies taken 
predominantly from the ftse industrial 
transportation and ftse travel  leisure 
sectors the companies comprising the 
comparator group have been chosen on 
the basis of their comparability to national 
express group plc based on their  
size and scope of business operations 
the committee has retained the power 
in respect of this element of an award to 
apply an earnings underpin
there is no ability to retest either 
performance condition eps and tsr have 
generally been chosen for the ltip as the 
most appropriate measures of the group’s 
long term performance since eps is an 
important growth measure considered 
within the company and a driver of 
shareholder value and tsr improves 
shareholder alignment and is consistent 
with the company objective of providing 
superior longterm returns to shareholders
for awards granted in 201 1 the eps 
performance conditions applying to part a 
of the awards and the tsr performance 
conditions applying to part b of the awards 
are set out in the table below
to determine vesting of ltip awards 
the committee retains independent 
consultants to test the proportion of an 
award vesting under the relative tsr test 
and then reviews the conclusion of this 
analysis before shares formally vest with 
regard to the eps targets vesting is based 
on the company’s audited results with 
liaison as required between the audit  
and remuneration committees 
the table below sets out the percentage  
of each extant award that would have 
vested if the performance conditions  
had been tested at 31 december 201 1 
without making any allowance for pro  
rata reduction for any period of less than 
three years
63
governance 
directors’ remuneration report  performance criteria
the committee believes that budgeted 
profit andor eps growth as performance 
measures for the discretionary bonus 
scheme and long term incentives in  
most normal circumstances provide  
a transparent and accessible method 
of gauging the financial performance of 
the company the company calculates 
performance against these performance 
measures by reference to the profit or 
earnings per share figures reported in 
the company’s audited accounts which 
the company believes to be the most 
transparent and objective measure of the 
company’s profit or eps the committee 
also monitors the group’s tsr against 
the ftse allshare travel  leisure index 
as a broad measure of the company’s 
performance tsr measured against a 
more tailored group of comparators has 
been used by the company as a primary 
performance measure for awards made 
to executive directors under the ltip as 
outlined on page 67 
it is currently intended that the 
performance targets that will apply to 
awards granted in 2012 will again be an 
equal blend of eps and tsr if it were 
considered appropriate to make any 
fundamental changes to the performance 
targets in 2012 it is anticipated that this 
would be accompanied by a consultation 
with major shareholders
governance
directors’ remuneration report continued
total shareholder return versus 
ftse allshare travel  leisure index
source thomson reuters
total shareholder return versus 
ftse 250 index
source thomson reuters
national express group cumulative return
ftse allshare travel  leisure cumulative return
national express annual return
ftse allshare travel  leisure annual return
each point plotted on the above graph represents the total cumulative shareholder 
return on an investment made in national express group on 31 december 2006 
compared with an investment in the ftse all share travel  leisure index with 
the corresponding annual returns 
national express group cumulative return
ftse 250 cumulative return
national express annual return
ftse 250 annual return
each point plotted on the above graph represents the total cumulative shareholder 
return on an investment made in national express group on 31 december 2006 
compared with an investment in the ftse 250 index with the corresponding 
annual returns 
80
60
40
20
0
20
40
60
2011 2010 2009 2008 2007
80
60
40
20
0
20
40
60
2011 2010 2009 2008 2007
25
  directors’ minimum shareholding
in order to align the interests of the 
directors more closely with the 
shareholders the remuneration 
committee has also determined that the 
executive directors should build up a share 
fund equal to at least one year’s current 
salary over a period of five years 
the graphs below show a comparison 
of national express group plc total 
cumulative shareholder return against that 
achieved by the ftse allshare travel  
leisure index and the ftse 250 index 
these indices have been selected because 
the company is a constituent of each index 
with the former including many members 
of the ltip tsr peer group and the 
committee therefore feels that these are 
the most appropriate indices to represent 
the company’s relative performance 
27
  directors’ service contracts notice 
periods and termination payments
 executive directors
the contract dates and notice periods for 
the executive directors are shown in the 
table on page 65
the service contracts of both the executive 
directors which are rolling contracts 
contain a provision exercisable at the 
option of the company to pay an amount 
on early termination of employment equal 
to one year’s salary or in the case of dean 
finch one year’s salary salary supplement
26
 
in lieu of pension and car allowance  
the company will use the payment in 
lieu of notice provisions when the speed 
certainty and protection of restrictive 
covenants afforded by such clauses  
are thought to be in the best interests  
of the company and the circumstances 
surrounding the departure of the relevant 
director justify their use 
in any event the committee’s policy is 
that payments to directors on termination 
should reflect the circumstances that 
prevail at the time also taking account if 
applicable and appropriate the director’s 
duty to mitigate
the committee continuously reviews 
its policies on executive remuneration 
and severance in the best interests of 
shareholders guidance on best practice 
expectations is taken into account prior to 
agreeing directors’ contractual provisions 
28
  executive directors’ external 
appointments
under the terms of their service 
agreements board approval is required 
before any external appointment may be 
accepted by an executive director the 
executive director is permitted to retain  
any fees paid for such services details  
of fees received by executive directors  
in 201 1 are shown below
64 29
  nonexecutive directors’ 
appointments
the nonexecutive directors do not have 
service contracts with the company but 
are appointed for an initial threeyear term 
nonexecutive directors are typically 
expected to serve for two threeyear 
terms although their appointment can be 
terminated either by them or the company 
on one month’s written notice it is open to 
the company to invite a nonexecutive to 
serve for a further period after the expiry 
of two threeyear terms all directors are 
required to stand at least once every three 
years for reappointment by shareholders 
the original appointment dates of the 
chairman and nonexecutive directors  
are shown below
 senior executive remuneration
the remuneration committee reviews 
and notes the salaries of senior executives 
within the group the salaries of this group 
of employees by band are as shown below
  executive directors’ service contracts and notice periods 
director contract date
notice period from the 
company
notice period from the 
director
jez maiden 17 november 2008 12 months 12 months
dean finch 16 december 2009 12 months 6 months
  executive directors’ external appointments
director fee external appointment
jez maiden £46500 yule catto  co plc
  nonexecutive directors’ appointment dates
director date of appointment
joaquín ayuso 1 june 201 1
jorge cosmen  1 december 2005 
miranda curtis 1 june 2008
john devaney 2 april 2009
sir andrew foster 1 august 2004 
chris muntwyler 1 1 may 201 1
lee sander 1 june 201 1
tim score 21 february 2005
  senior executive remuneration
salary band £000
number of  
executives  
2011
201–410 7
151–200 13
101–150 44
75–100 51
  conditional award of shares  
to dean finch
as disclosed in prior years dean finch 
was granted a share award in relation 
to his appointment as group chief 
executive under a oneoff arrangement in 
accordance with listing rule 942 2 
the share award comprised two parts 
an award of 28023 shares the ‘first 
award’ and an award of 18281 shares 
the ‘second award’ each award is 
structured as an award of forfeitable shares 
in compensation for forfeited remuneration 
in relation to joining the company the 
first award vested on 1 april 201 1 and the 
second award will ordinarily vest on 1 april 
2012 subject to the terms of the award 
at the time of vesting the relevant shares 
subject to the awards will cease to be 
subject to a risk of forfeiture
  conditional award of shares  
to jez maiden
as disclosed in prior years jez maiden 
was granted a share award under a similar 
oneoff arrangement to that described 
above for dean finch in respect of his 
appointment as group finance director  
in 2008
the award comprised three parts an 
award over 2107 4 shares the ‘first award’ 
an award over 21075 shares the ‘second 
award’ and an award over 28666 shares 
the ‘third award’ each award was 
structured as a conditional right to free 
shares the terms of which were set after 
taking account of jez maiden’s forfeited 
awards which included performance  
and nonperformance awards the first 
and second awards have now vested 
the third award which was due to vest 
on 17 november 201 1 did not vest as the 
performance targets applicable which 
were identical to those set for the 2008 
ltip awards were not met details  
of the performance targets a mix of 
earnings per share and shareholder return 
targets are set out in note 4 to the ltip 
awards table on page 67 
65
governance 
directors’ remuneration report information subject to audit directors’ remuneration
directors’ emoluments
salaryfees 
£000
performance  
related
bonus
2
£000
benefits
1
£000
benefits in lieu 
of pension 
£000
total  
2011 
£000
total  
2010 
£000
executive directors
dean finch 550 687 25 192 1454 1356
jez maiden 420 472
3
24 105 1021 923
former executive director
ray o’toole resigned 5 may 2010 – – – – – 1072
nonexecutive directors
john devaney chairman 225 – – – 225 250
tim score senior independent director 60 – – – 60 56
jorge cosmen deputy chairman 45 – – – 45 44 
joaquín ayuso appointed 1 june 201 1 30
4
– – – 30 –
miranda curtis 55 – – – 55 51
roger devlin resigned 28 june 201 1 32 – – – 32 51
sir andrew foster 45 – – – 45 44 
chris muntwyler appointed 1 1 may 201 1 37
4
– – – 37 –
lee sander appointed 1 june 201 1 30
4
– – – 30 –
1
 benefits in kind include a cash alternative to a fully expensed car life assurance and health insurance
2
 25 of the bonus awarded is deferred into the company’s shares for a period of one year
3
  jez maiden sacrificed part of his cash bonus entitlement before its award pension contributions equal to the amount given up were made into pension plans  
for the benefit of his dependants the amount shown in the bonus column reflects the full bonus earned
4
 an additional fee of £4000 is paid for attendance at board meetings held outside the continent in which the nonexecutive director is resident
directors’ shareholdings
directors’ interests and transactions
the beneficial and nonbeneficial interests of the directors in office as at 31 december 201 1 are shown below
at 31  
december  
2011
at 1 january 
2011 or on 
appointment  
if later
change from  
31 december 
2011 to  
29 february  
2012
executive directors
dean finch 114579 68275 –
jez maiden 116347 116347 –
nonexecutive directors
joaquín ayuso appointed 1 june 201 1 – – –
jorge cosmen
2
 88860685 88860685 –
miranda curtis – – –
john devaney 76666 66666 –
roger devlin resigned 28 june 201 1
1
– 65916 –
sir andrew foster 22893 22893 –
chris muntwyler appointed 1 1 may 201 1 – – –
lee sander appointed 1 june 201 1 – – –
tim score – – –
the above table is not subject to audit
1
 for roger devlin as at date of resignation 
2
 jorge cosmen’s holding includes shares held by european express enterprises ltd which are shown on page 53 in the list of major shareholdings in the company 
governance
directors’ remuneration report continued
31
 
30
 
66 33
 conditional awards of shares to executive directors
at 1  
january  
2011
during year
at 31 
december 
2011
option  
price
market price 
at date of 
exercise
date of 
vesting exercised expired
dean finch first award
1
28023 28023
2
– – – 2336p 1411
second award
1
18281 – – 18281 – – 1412
jez maiden third award
3
55176 – 55176 – – – 17 1111
 notes
 1
  each award is structured as an award of forfeitable shares at the time of vesting the relevant shares subject to the awards will cease to be subject to a risk of forfeiture
 
2
 the aggregate gain on the shares which were exercised in 2011 was £65000
 3
  the extent of vesting of the third award was dependent on the satisfaction of performance targets assessed over a three year performance period the performance targets 
applying to the third award were identical to those set for the 2008 ltip awards a mix of earnings per share and shareholder return targets at the end of the performance 
period the tsr performance and the eps performance had both been such as to cause 0 of the relevant part of the award to vest
 ltip awards to executive directors
ltip share 
awards
at 1  
january  
2011
during year
at 31 
december 
2011
market price  
on date of 
award
market price  
at date of 
exercise
date from 
which 
exercisable
expiry  
date granted exercised expired
dean finch performance 
shares
227 272 – – – 227272 2203p – 150313 150913
matching 
shares
227 270 – – – 227270 2203p – 150313 150913
performance 
shares
– 222672 – – 222672 2470p – 250214 250814
matching 
shares
– 267204 – – 267204 2470p – 250214 250814
jez maiden performance 
shares
176342 – – – 176342 2104p – 010912 010313
matching 
shares
132637 – – – 132637 2104p – 010912 010313
performance 
shares
174672 – – – 174672 2300p – 010413 011013
matching 
shares
174670 – – – 174670 2300p – 010413 011013
performance 
shares
– 170040 – – 170040 2470p – 250214 250814
matching 
shares
– 204048 – – 204048 2470p – 250214 250814
 notes
 1
  details of the performance conditions applicable to the 2011 awards are shown on page 63
 2
  the tsr performance conditions applicable to the 2010 awards are the same as for the 2011 awards and the relevant maximum and minimum eps figures are 28 pence  
and 23 pence
 3
  eps targets were not applicable to 2009 awards as the prevailing economic conditions made it difficult to set a robust range of eps targets and the tsr performance 
condition as described on page 63 was applied as the sole performance condition to 100 of the award to ensure that the relative condition was supported by improved 
underlying financial performance awards made in 2009 were also subject to an earnings underpin that applies to the extent that the tsr performance condition is met
 4
  the tsr performance conditions applicable to the 2008 awards were the same as for the 2011 awards and the relevant maximum and minimum eps figures were  
6 and 3 inflationary growth performance and matching shares granted under the ltip on 10 april 2008 expired on 10 april 2011 at the end of the performance period 
tsr performance and eps performance had been such as to result in 0 of the relevant part of the award to vest
   market price at date of award restated to reflect the rights issue on 15 december 2009
awards of shares granted under oneoff 
arrangements to dean finch and jez 
maiden in relation to their appointments  
are shown in the table below
32
  long term incentive plan ‘ltip’ 
awards
performance shares of 1 x salary are 
awarded to executive directors as nil cost 
options under the long term incentive 
plan in addition matching shares are also 
awarded as nil cost options based on up 
to two matching shares being awarded for 
each invested share as described earlier 
to a maximum of 1 20 of salary under the 
share matching element of the ltip  further 
details of the ltip and the performance 
conditions that have applied to each award 
below are shown on page 63 and in the 
notes to the ltip awards table below
67
governance 
directors’ remuneration report  the national express group executive deferred bonus plan ‘executive deferred bonus plan’
deferred bonuses awarded in 201 1 based on performance to 31 december 2010 vested subject to the terms of the award on 
25 february 2012 as set out in the table below
 of total 
bonus
deferred 
shares 
award
as at 1 january 2011
at 31 
december 
2011
option  
price
market price 
at date  
of vesting
date of 
vesting granted exercised expired
dean finch 25 – 49427 – – 49427 – 2221p 250212
jez maiden 25 – 39541 – – 39541 – 2221p 250212
notes
1
 the vesting of the awards is subject to continued service and standard good leaver provisions
2
 clawback provisions apply as explained on page 61
in respect of the operation of the long term incentive plan the company operates the national express group employee benefit trust 
which currently holds 314528 shares as at 29 february 2012
the register of directors’ interests maintained by the company contains full details of the directors’ holdings of shares and options over 
shares in the company no ltips vested during the year the midmarket price of the company’s ordinary shares at 31 december 201 1 
was 223 pence 2010 251p and the range during the year ended 31 december 201 1 was 2702 pence to 2016 pence
by order of the board
miranda curtis 
director and chairman of the remuneration committee 
29 february 2012
governance
directors’ remuneration report continued
34
68 principal activities
national express group plc is the holding 
company of the national express group 
of companies its subsidiary companies 
provide mass passenger transport 
services in the uk and overseas
business review
reviews of the business likely future 
developments and details of principal risks 
and uncertainties can be found in the 
following pages and are incorporated by 
reference into this report
•	 group chief executive’s review on 
pages 3 to 7 
•	 financial review on pages 32 to 36
branches outside the uk
the company has branches in spain
results and dividends
the profit on ordinary activities before 
tax from continuing operations for the 
year ended 31 december 201 1 was 
£1294 million 2010 £402m and a 
profit attributable to equity shareholders 
of £1012 million 2010 £614m was 
transferred to reserves
the directors recommend a final dividend 
for the year of 65 pence per ordinary 
share 2010 6p which together with the 
interim dividend of 3 pence per ordinary 
share 2010 0p paid on 23 september 
201 1 gives a total dividend for the year of 
95 pence per share 2010 6p subject 
to shareholder approval the final dividend 
will be paid on 18 may 2012 to ordinary 
shareholders on the register of members  
at the close of business on 27 april 2012
directors
the directors of the company who served 
during the year were
john devaney 
joaquín ayuso appointed 1 june 201 1 
miranda curtis  
jorge cosmen  
roger devlin resigned 28 june 201 1 
dean finch 
sir andrew foster  
jez maiden  
chris muntwyler appointed 1 1 may 201 1 
lee sander appointed 1 june 201 1 
tim score 
directors are appointed by ordinary 
resolution at a general meeting of ordinary 
shareholders the directors have the 
power to appoint a director during the 
year but any person so appointed must be 
put up for appointment at the next agm 
in accordance with the provisions of the 
articles of association of the company 
and the relevant corporate governance 
codes directors will retire at the upcoming 
agm details concerning their reelection 
will be set out in the notice of agm details 
of the remuneration of the directors their 
interests in shares of the company and 
service contracts are contained in the 
directors’ remuneration report on  
pages 59 to 68
corporate governance
a full report on corporate governance can 
be found in the governance section of this 
document and the company’s corporate 
governance statement is on page 72  
both are incorporated by reference into  
this report
directors’ interests in contracts
except as stated in note 36 on  
page 134 no contract existed during  
the year in relation to the company’s 
business in which any director was 
materially interested
directors’ liability insurance
the company maintains directors’ and 
officers’ liability insurance in respect of 
legal action that might be brought against 
its directors pursuant to the company’s 
articles of association the company  
has indemnified its directors and officers  
in accordance with the provisions of 
section 233 of the companies act 2006 
a copy of the articles of association is 
available for inspection at the company’s 
registered office 
events after the balance sheet date
on 5 february 2012 the group passed 
over the running of the east anglia rail 
franchise to abellio greater anglia limited
employment policies
the group strives to meet its business 
objectives by motivating and encouraging 
its employees to be responsive to the 
needs of its customers and continually 
improve operational performance the 
group is committed to providing equality 
of opportunity to employees and potential 
employees this applies to appropriate 
training career development and 
promotion for all employees regardless of 
physical ability gender sexual orientation 
religion age or ethnic origin all businesses 
in the group report diversity data
full and fair consideration is given to 
applications for employment received 
from disabled persons according to their 
skills and capabilities the services of 
any existing employee disabled during 
their period of employment are retained 
wherever possible
employee involvement
the group encourages employee 
involvement in its affairs subsidiary 
companies produce a range of internal 
newsletters and circulars which keep 
employees abreast of developments 
senior management within the group meet 
regularly to review strategic developments 
and management conferences are held 
at group and business levels to bring our 
senior managers together to share ideas 
and develop policy dialogue takes place 
regularly with trade unions and other 
employee representatives on a wide range 
of issues employees are able to share 
in the group’s results through various 
employee share schemes
governance
directors’ report 69
governance 
directors’ report employee views are also sought 
through regular employee satisfaction 
questionnaires both within business units 
and across the group following such 
surveys results are shared with employees 
and action plans are put in place to deal 
with issues arising the group’s innovation 
programme gives high priority to employee 
engagement as well as seeking the 
opinions of our customers
the group places considerable emphasis 
on the development of its employees 
through individual development plans 
a scheme to focus on the identification  
and development of our high potential staff 
was launched in 2010 succession plans 
are in place in each business and these  
are monitored by the board
environmental policy
information on the group’s environmental 
initiatives can be found in the corporate 
responsibility review on page 40  
and in the corporate responsibility 
section of the company’s website 
nationalexpressgroupcom where you 
will find corporate responsibility reports 
policies and other information
charitable and political contributions
charitable donations made during the  
year totalled £228000 2010 £151000  
it is the group’s policy not to make political 
donations and accordingly none were 
made in the year however the company 
did attend party political conferences 
during the year for which total expenditure 
was £6000 2010 £14000
creditors’ payment policy and 
practice
it is the company’s policy to agree terms  
of payment prior to commencing trade  
with any supplier and to abide by those 
terms based on the timely submission  
of satisfactory invoices 
trade creditor days of the company for the 
year ended 31 december 201 1 were 17 
days 2010 23 days based on the ratio  
of company trade creditors at the end of 
the year to the amounts invoiced during  
the year by trade creditors
financial instruments
details of the use by the company and its 
subsidiaries of financial instruments and 
any related risk management objectives 
and policies including hedging policy and 
exposure including price credit liquidity 
or cash flow risk of the company in 
connection with such financial instruments 
can be found in the notes to the 
consolidated accounts on pages 81  
to 136 and are incorporated by reference 
into this report
major shareholdings
disclosures of major shareholdings  
notified to the company pursuant to 
dtr5 are shown on page 53 and these 
disclosures are incorporated by reference 
into this report
share capital and rights attaching  
to the company’s shares
under the company’s articles of 
association any share in the company 
may be issued with such rights or 
restrictions whether in regard to dividend 
voting return of capital or otherwise as 
the company may from time to time by 
ordinary resolution determine or in the 
absence of any such determination as  
the directors may determine 
at 31 december 201 1 the company’s 
issued share capital consisted of a single 
class of ordinary shares with a nominal 
value of 5 pence at a general meeting of 
the company every member has one vote 
on a show of hands and on a poll one vote 
for each share held the notice of agm 
accompanying this document specifies 
deadlines for exercising voting rights either 
by proxy or by being present in person in 
relation to resolutions to be passed at a 
general meeting details of the authorised 
and issued share capital of the company 
and details of shares issued during the year 
can be found in note 32 on page 124 
as at 29 february 2012 the company  
held a total of 1668688 ordinary 5 pence 
shares nominal value £83434 in treasury 
equal to 033 of the issued share capital
no shareholder is unless the board 
decides otherwise entitled to attend or 
vote either personally or by proxy at a 
general meeting or to exercise any other 
right conferred by being a shareholder if he 
or she or any person with an interest in his 
or her shares has been sent a notice under 
section 793 of the companies act 2006 
which confers upon public companies the 
power to require information with respect 
to interests in their voting shares and he 
or she or any interested person failed to 
supply the company with the information 
requested within 14 days after delivery of 
that notice the board may also decide 
that no dividend is payable in respect of 
those default shares and that no transfer 
of any default shares shall be registered 
these restrictions end seven days after 
receipt by the company of a notice of an 
approved transfer of the shares or all the 
information required by the relevant section 
793 notice whichever is earlier
the directors may refuse to register 
any transfer of any share which is not a 
fullypaid share although such discretion 
may not be exercised in a way which the 
financial services authority regards as 
preventing dealings in shares of that class 
from taking place on an open or proper 
basis the directors may likewise refuse 
any transfer of a share in favour of more 
than four persons jointly
the company is not aware of any other 
restrictions on the transfer of ordinary 
shares in the company other than
•	 certain restrictions that may from 
time to time be imposed by laws and 
regulations for example insider trading 
laws and
•	 pursuant to the listing rules of the 
financial services authority whereby 
certain employees of the company 
require approval of the company to  
deal in the company’s shares
the company is not aware of any 
agreements between shareholders that 
may result in restrictions on the transfer  
of securities or voting rights
resolutions will be proposed at the 2012 
agm to authorise the directors to exercise 
all powers to allot shares or grant rights  
for or to convert any security into shares 
and approve a limited disapplication of 
statutory preemption rights details are set 
out in the notice of agm accompanying 
this document
the company was granted authority at the 
agm in 201 1 to purchase its own shares 
up to an aggregate value of 10 of the 
issued nominal capital the authority was 
not used during the year the authority 
is renewed annually and approval will be 
sought at the agm in 2012 for its renewal 
further details are set out in the notice of 
agm accompanying this document
governance
directors’ report continued 70 share schemes
the ifg trust jersey limited as trustee 
of the national express group employee 
benefit trust as at 29 february 2012 held 
314528 shares 006 of the share capital 
of the company for employee share 
schemes further details of the company’s 
employee share schemes can be found in 
note 7 on page 95 and are incorporated  
by reference into this report the trustee 
may vote the shares held by the trust at  
its discretion
articles of association
any amendments to the company’s 
articles of association may be made in 
accordance with the provisions of the 
companies act 2006
annual general meeting
the annual general meeting agm will  
be held at 200pm on 10 may 2012 at 
kings place 90 york way london 
n1 9ag at the meeting special resolutions 
will be proposed to authorise the directors 
to issue shares without applying statutory 
preemption rights to authorise the 
company to make market purchases 
of its own shares and to authorise the 
calling of general meetings other than 
annual general meetings on 14 clear 
days’ notice full details are provided in 
the notice of meeting if you would like 
to register any question you may have in 
advance of the agm you can do so at 
agmnationalexpresscom or you can 
write to the company secretary at national 
express group plc national express 
house birmingham coach station mill 
lane digbeth birmingham b5 6dd
powers of the directors
subject to its articles of association and 
relevant statutory law and to any direction 
that may be given by the company in 
general meeting by special resolution 
the business of the company shall be 
managed by the directors who may 
exercise all powers of the company which 
are not required to be exercised by the 
company in general meeting
material contracts and change  
of control agreements
the company is party to a number of 
banking agreements which allow for 
notification of change of control within 
five days of becoming aware of the event 
following which repayment of outstanding 
commitments is to be made within 
30 days
under the terms of the £1000000000 
euro medium term note programme 
under which the company issued medium 
term notes mtns to various institutions 
on 13 january 2010 there is a change 
of control put option such that upon a 
change of control event any holder of any 
mtn may require the company to redeem 
or purchase that mtn 
the group currently runs one dft 
franchise c2c the national express east 
anglia franchise was transferred to abellio 
greater anglia limited on 6 february 2012 
the rail franchise agreement with dft 
contains termination rights for the benefit of 
dft which would be triggered by a change 
of control in national express group plc
the group’s rail franchisee c2c leases 
its rolling stock and its leases with 
porterbrook leasing company limited 
contain termination rights for the benefit 
of the lessor which would be triggered by 
a change of control in national express 
group plc
the group’s north american business 
operates school bus services under 
contracts with school boards those 
contracts invariably contain a change of 
control clause for the benefit of the board 
which would be triggered by a change of 
control in national express group plc 
while no one single school bus contract 
could be considered significant in  
the context of the group turnover  
the impact on that turnover in the  
event that each school board exercised  
its termination right on a change of  
control would be significant
directors’ and employees’ service 
contracts
there are no agreements between the 
company and its directors or employees 
providing for compensation for loss of 
office or employment whether through 
resignation purported redundancy or 
otherwise that occurs because of a 
takeover bid
auditor
following a competitive tender process 
during the year ernst  young llp 
resigned as auditor of the company 
on 10 june 201 1 and deloitte llp was 
appointed in their place on 14 june 201 1 
resolutions to reappoint deloitte llp as 
auditor of the company and to authorise 
the directors to fix their remuneration will 
be proposed at the 2012 agm
disclosure of information to auditor
the directors confirm that so far as 
they are aware there is no relevant audit 
information of which the company’s 
auditor is unaware and that each director 
has taken all the steps that they ought  
to have taken as a director in order to 
make themselves aware of any relevant 
audit information and to establish that  
the company’s auditor is aware of  
that information
risks
a summary of the company’s risk 
management framework and an overview 
of its principal risks are detailed on pages 
37 to 39 and are incorporated by reference 
into this report
going concern
the group’s business activities together 
with the factors likely to affect its future 
development performance and position 
are set out in the business review the 
financial position of the group its cash 
flows liquidity position and borrowing 
facilities are described in the group chief 
executive’s review on pages 3 to 7 and 
the financial review on pages 32 to 37  in 
addition note 30 to the financial statements 
includes the group’s objectives policies 
and processes for managing its capital 
its financial risk management objectives 
details of its financial instruments and 
hedging activities and its exposure to 
credit risk and liquidity risk
the group has a formalised process of 
budgeting reporting and review which 
provides information to the directors  
which is used to ensure the adequacy  
of resources available for the group  
to meet its business objectives
the directors have a reasonable 
expectation that the company and the 
group have adequate resources to 
continue in operational existence for a 
period of at least 12 months from the date 
of signing the accounts accordingly they 
continue to adopt the going concern basis 
of accounting in preparing the annual 
financial statements
71
governance 
directors’ report governance
statutory information 
for more information please go  
to nationalexpressgroupcom
35
  statement of compliance with  
the uk corporate governance code 
in the opinion of the directors the 
company has complied with the provisions 
of the uk corporate governance code 
issued by the financial reporting  
council in 2010 save in respect of the 
following provisions
  b21 the composition of the 
nomination committee
jorge cosmen who is a member of the 
nomination committee is not considered 
to be independent however as deputy 
chairman and the representative of one  
of the company’s largest shareholders  
the board considers mr cosmen should be 
a member of the nomination committee 
in order to be involved in the recruitment 
process for board appointments
  c31 the composition of the audit 
committee and d21 the composition 
of the remuneration committee
following the resignation of roger 
devlin the audit committee and the 
remuneration committee consisted of two 
nonexecutive directors for a short period 
until the appointment of chris muntwyler  
to the audit committee and lee sander  
to the remuneration committee in 
november 2011
36
  reelection of directors
in accordance with the company’s 
articles of association and the principles 
of the uk corporate governance code 
published by the financial reporting 
council in 2010 directors of the company 
will offer themselves for reelection at this 
year’s agm nonexecutive directors are 
appointed for specific terms subject to re
election nonexecutive directors will only 
be put forward for reelection if following 
performance evaluation the board believes 
the director’s performance continues to be 
effective and demonstrates commitment 
to the role 
  remuneration and service contracts 
of directors
the directors’ remuneration report 
including details of remuneration policy  
and service contracts is set out on  
pages 58 to 68
37
  directors’ conflicts of interest
the board has a procedure in place to 
deal with a situation where a director 
has a conflict of interest as required by 
the companies act 2006 as part of 
this process the members of the board 
prepare a list of other positions held 
and all other conflict situations that may 
need authorising either in relation to the 
director concerned or hisher connected 
persons the board considers each 
director’s situation and decides whether to 
approve any conflict situations taking into 
consideration what is in the best interests 
of the company and whether the director’s 
ability to act in accordance with his or her 
wider duties is affected each director is 
required to notify the company secretary 
of any potential or actual conflict situations 
that will need authorising by the board 
authorisations given by the board are 
reviewed annually
  accountability and audit
statements of the respective 
responsibilities of the directors and 
auditors are set out on pages 7 4 and 75
  directors’ and officers’ liability 
insurance
the company purchases directors’ 
and officers’ liability insurance for the 
company and its subsidiaries which gives 
appropriate cover for any legal action 
brought against its directors
38
  internal control statement
 the board’s responsibilities
the board has overall responsibility for 
the group’s system of internal control and 
for reviewing its effectiveness the board 
maintains full control and direction over 
appropriate strategic financial operational 
and compliance issues and has put in 
place an organisational structure with 
formally defined lines of responsibility 
delegated authorities and clear operating 
processes the systems that the board 
has established are designed to safeguard 
both the shareholders’ investment and  
the assets of the group and are  
described as follows 
72   key elements of the control framework
financial reporting process – 
management and specialists within the 
finance department are responsible for 
ensuring the appropriate maintenance of 
financial records and processes to ensure 
that all information is relevant reliable and 
in accordance with the applicable laws 
and regulations and distributed both 
internally and externally in a timely manner 
a review of the consolidation and financial 
statements is completed by management 
to ensure that the financial position and 
results of the group are appropriately 
reflected all financial information published 
by the group is subject to the approval  
of the audit committee
performance management – the 
performance of each division and 
operating company against its plan is 
closely monitored by a formal monthly 
reporting process and by the attendance 
of the relevant executive directors at 
monthly divisional executive meetings
annual fitness check process – internal 
audit undertake an annual review at each 
operating company to assess the integrity 
of the balance sheet and to check the 
effective operation of key financial reporting 
and information systems controls the 
results of the reviews are presented to 
both divisional and group finance with any 
required actions agreed with the relevant 
divisional finance director
strategic and financial planning –  
an annual budgeting and strategic planning 
process has been established whereby 
each division and constituent operating 
company assesses its competitive position 
and goals taking account of the strategic 
risks faced this strategy is translated into 
a financial plan with clear milestones and 
performance indicators
capital investment – a clear process 
is in place for the approval of capital 
expenditure which includes detailed 
appraisal of the benefits of the proposed 
investment and any associated key risks 
material capital expenditure requires  
board approval
health and safety – health and safety 
standards and benchmarks have  
been established in all our businesses  
and the performance of operating 
companies in meeting these standards  
is closely monitored
risk management reporting process 
– each division and operating company 
evaluates its internal control environment 
and key risks and the results are reviewed 
at management level and passed to  
the audit committee before being 
presented to the board this process  
is reviewed on a regular basis to ensure  
the validity and relevance of the key  
risks included in reports the review  
covers strategic financial compliance 
and risk management controls these 
procedures are mandated and designed  
to manage the risk in order to ensure  
that the operations achieve their  
business objectives
internal audit – the internal control 
system is independently monitored and 
supported by a group internal audit 
function the internal audit function reports 
to management and the audit committee 
on the group’s financial and operational 
controls and monitors and reviews the 
extent to which its recommendations have 
been implemented
boardlevel reporting on internal 
control – during the year the audit 
committee reviews regular reports from 
the internal audit function the external 
auditors and executive management on 
matters relating to internal control financial 
reporting and risk management the audit 
committee provides the board with an 
independent assessment of the group’s 
financial position accounting affairs and 
control systems in addition the board 
receives regular reports on how specific 
risks that are assessed as material to the 
group are being managed
  review of internal control effectiveness
the system of internal control and risk 
management described above has been 
in place for the year under review and  
up to the date of approval of this annual 
report and accounts such a system 
is designed to manage rather than to 
eliminate the risks inherent in achieving 
the group’s business objectives and can 
therefore provide only reasonable and 
not absolute assurance against material 
misstatement or loss the effectiveness  
of this system has been regularly reviewed 
by the directors in line with the guidance 
on audit committees published by the 
financial reporting council in december 
2010 where significant control failings 
or weaknesses have been identified 
appropriate corrective action has  
been taken
39
  whistle blowing policy
‘whistle blowing’ policies are in place in 
each of the group’s businesses and are 
also available on the group’s website 
wwwnationalexpressgroupcom the 
board supports the highest standards of 
corporate governance and ethical practices 
within all its operations and continues to 
review its policies on an ongoing basis 
the board has endorsed a set of principles 
which establish the framework for how 
its businesses operate key to these is 
working in an open and honest manner 
the group is committed to the highest 
standards of quality honesty openness 
and accountability employees are 
encouraged to raise genuine concerns 
under the policy either by contacting their 
line manager or telephoning a dedicated 
external helpline any concerns raised 
are investigated carefully and thoroughly 
to assess what action if any should 
be taken and confidential records are 
maintained the company secretary 
reports any matters of significance to the 
appropriate committee in 201 1 no issues 
of significance were raised
 antibribery policy
a group antibribery policy has been 
established and issued to all group 
companies and is also available  
on the group’s website at 
nationalexpressgroupcom the policy 
prohibits any inducement which results  
in a personal gain or advantage to the 
recipient or any person or body associated 
with them and which is intended to 
influence them to take action which may 
not be solely in the interests of the group 
or of the person or body employing them 
or which they represent the prevention 
detection and reporting of bribery is  
the responsibility of all employees 
throughout the group employees 
can report confidentially any suspicion 
of bribery via an externally facilitated 
whistleblower hotline
40
  s ha r e ca p i t al
information about the share capital of the 
company is included in the directors’ 
report on page 70
73
governance 
statutory information governance
directors’ responsibilities statement
the directors are responsible for preparing the annual report and the financial statements in accordance with applicable law  
and regulations
company law requires the directors to prepare financial statements for each financial year under that law the directors are required 
to prepare the group financial statements in accordance with international financial reporting standards ifrss as adopted by the 
european union and article 4 of the ias regulation and have elected to prepare the parent company financial statements in accordance 
with united kingdom generally accepted accounting practice united kingdom accounting standards and applicable law under 
company law the directors must not approve the accounts unless they are satisfied that they 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 
in preparing the parent company financial statements the directors are required to
•	 select suitable accounting policies and then apply them consistently
•	 make judgments and accounting estimates that are reasonable and prudent
•	 state whether applicable uk accounting standards have been followed subject to any material departures disclosed and explained 
in the financial statements and
•	 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue  
in business
in preparing the group financial statements international accounting standard 1 requires that directors
•	 properly select and apply accounting policies
•	 present information including accounting policies in a manner that provides relevant reliable comparable and understandable 
information 
•	 provide additional disclosures when compliance with the specific requirements in ifrss is insufficient to enable users to understand 
the impact of particular transactions other events and conditions on the entity’s financial position and financial performance and
•	 make an assessment of the company’s ability to continue as a going concern
the directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s 
transactions and 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 2006 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 corporate and financial information included on the company’s 
website legislation in the united kingdom governing the preparation and dissemination of financial statements may differ from 
legislation in other jurisdictions
responsibility statement 
we confirm that to the best of our knowledge
•	 the financial statements prepared in accordance with the relevant financial reporting framework give a true and fair view of the 
assets liabilities financial position and profit or loss of the company and the undertakings included in the consolidation taken as  
a whole and
•	 the business review which is incorporated into the directors’ report includes a fair review of the development and performance  
of the business and the position of the company and the undertakings included in the consolidation taken as a whole together  
with a description of the principal risks and uncertainties that they face
by order of the board
dean finch 
chief executive officer
29 february 2012
jez maiden 
group finance director
29 february 2012
74 financial statements 
independent auditor’s report  
to the members of national express group plc
we have audited the group financial statements of national express group plc for the year ended 31 december 201 1 which comprise 
the group income statement the group statement of comprehensive income the group balance sheet the group statement of 
changes in equity the group cash flow statement and the related notes 1 to 38 the financial reporting framework that has been 
applied in their preparation is applicable law and international financial reporting standards ifrss as adopted by the european union
this report is made solely to the company’s members as a body in accordance with chapter 3 of part 16 of the companies act 2006 
our audit work has been undertaken so that we might state to the company’s members those matters we are required to state  
to them in an auditor’s report and for no other purpose to the fullest extent permitted by law we do not accept or assume responsibility 
to anyone other than the company and the company’s members as a body for our audit work for this report or for the opinions  
we have formed
respective responsibilities of directors and auditor
as explained more fully in the directors’ responsibilities statement the directors are responsible for the preparation of the group 
financial statements and for being satisfied that they give a true and fair view our responsibility is to audit and express an opinion  
on the group financial statements in accordance with applicable law and international standards on auditing uk and ireland  
those standards require us to comply with the auditing practices board’s ethical standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material misstatement whether caused by fraud or error this includes an 
assessment of whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied 
and adequately disclosed the reasonableness of significant accounting estimates made by the directors and the overall presentation 
of the financial statements in addition we read all the financial and nonfinancial information in the annual report to identify material 
inconsistencies with the audited financial statements if we become aware of any apparent material misstatements or inconsistencies  
we consider the implications for our report
opinion on financial statements
in our opinion the group financial statements
•	 give a true and fair view of the state of the group’s affairs as at 31 december 201 1 and of its profit for the year then ended
•	 have been properly prepared in accordance with ifrss as adopted by the european union and
•	 have been prepared in accordance with the requirements of the companies act 2006 and article 4 of the ias regulation
opinion on other matter prescribed by the companies act 2006
in our opinion the information given in the directors’ report for the financial year for which the group financial statements are prepared  
is consistent with the group financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report to you if in our opinion
•	 certain disclosures of directors’ remuneration specified by law are not made or
•	 we have not received all the information and explanations we require for our audit
under the listing rules we are required to review
•	 the directors’ statement set out on page 71 in relation to going concern 
•	 the part of the corporate governance statement relating to the company’s compliance with the nine provisions of the uk corporate 
governance code specified for our review and
•	 certain elements of the report to shareholders by the board on directors’ remuneration
other matters
we have reported separately on the parent company financial statements of national express group plc for the year ended 
31 december 201 1 and on the information in the directors’ remuneration report that is described as having been audited 
nigel mercer senior statutory auditor
for and on behalf of deloitte llp 
chartered accountants and statutory auditor 
birmingham uk 
29 february 2012
75
financial statements
independent auditor’s report   group income statement  
for the year ended 31 december 2011 76
 
  note 
total before 
intangible 
amortisation 
and 
exceptional 
items 
2011 
£m 
intangible 
amortisation 
and 
exceptional 
items 
2011 
£m 
total 
2011 
£m 
total before 
intangible 
amortisation  
and 
exceptional 
items  
2010  
£m 
intangible 
amortisation  
and 
exceptional 
items  
2010  
£m 
total 
2010 
£m 
continuing operations        
revenue 4  22380 – 22380 21259 – 21259 
operating costs before intangible 
amortisation and exceptional 
items   20128 – 2012819217 – 19217
intangible amortisation  514  – 508 508 – 571 571
exceptional items  5  – – – – 612 612
total operating costs  6  20128 508 20636 19217 1183 20400
group operating profitloss  2252 508 1744 2042 1183 859 
share of post tax results from 
associates and joint ventures 
accounted for using the equity 
method  18  14 – 14 03 – 03 
finance income  49  67 – 67 48 – 48 
finance costs  9  531 – 531 488 20 508
profitloss before tax   1802 508 1294 1605 1203 402 
tax chargecredit  10  415 147 268 392 617 225 
profitloss after tax for the year 
from continuing operations   1387 361 1026 1213 586 627 
loss for the year from 
discontinued operations  11  – – – – 04 04
profitloss for the year   1387 361 1026 1213 590 623 
profitloss attributable to  
equity shareholders   1373 361 1012 1204 590 614 
profit attributable to  
noncontrolling interests   14 – 14 09 – 09 
  1387 361 1026 1213 590 623 
earnings per share        
– basic earnings per share  13    199p   120p 
– diluted earnings per share  13   198p   120p 
normalised earnings per share        
– basic earnings per share  13 270p   236p   
– diluted earnings per share  13 269p    235p   
earnings per share from 
continuing operations        
– basic earnings per share  13    199p   121p 
– diluted earnings per share  13   198p   121p  group statement of  
comprehensive income  
for the year ended 31 december 2011 
 
77
financial statements 
group statement of comprehensive income
 
 note 
2011  
£m 
2010 
£m 
profit for the year  1026 623 
  
 
other comprehensive income   
 
exchange differences on retranslation of foreign operations net of hedging  264 18
exchange differences on retranslation of noncontrolling interests   02 02
actuarial lossesgains on defined benefit pension plans  34  86 343 
gain on cash flow hedges   242 211 
transfers to the income statement on cash flow hedges  253 23 
tax on exchange differences   29 60
deferred tax on actuarial lossesgains   04 98
deferred tax on cash flow hedges   06 66
other comprehensive expenditureincome for the year net of tax  336 333 
  
 
 
total comprehensive income for the year   690 956 
  
 
 
total comprehensive income attributable to  
 
 
equity shareholders   679 949 
noncontrolling interests   11 07 
  690 956 
  group balance sheet 
at 31 december 2011 
 
78
 note 
2011 
£m 
2010 
£m 
noncurrent assets    
intangible assets  14 12125 12842 
property plant and equipment  15  7545 7141 
available for sale investments  17  76 78 
derivative financial instruments  17  310 72 
investments accounted for using the equity method  18  66 66 
trade and other receivables  20  59 60 
deferred tax asset  27  – 28 
defined benefit pension asset 34 186 – 
  20367 20287 
current assets    
inventories  21  188 176 
trade and other receivables  22  2481 2268 
derivative financial instruments  17  211 183 
current tax assets   09 34 
cash and cash equivalents  23  925 1288 
  3814 3949 
total assets   24181 24236 
noncurrent liabilities  
 
 
borrowings  28  7184 6744
derivative financial instruments  28  24 51
deferred tax liability  27  952 869
other noncurrent liabilities  25  49 252
noncurrent tax liabilities  54 123
defined benefit pension liability  34  204 104
provisions  26  240 357
  8707 8500
current liabilities   
trade and other payables  24  4664 4706
borrowings  28  548 948
derivative financial instruments  28  02 124
current tax liabilities   197 121
provisions  26  409 439
  5820 6338
total liabilities   14527 14838
net assets   9654 9398 
shareholders’ equity    
called up share capital  32  256 256 
share premium account   5327 5327 
capital redemption reserve   02 02 
own shares   140 141
other reserves  33  999 1251 
retained earnings   3131 2637 
total shareholders’ equity   9575 9332 
noncontrolling interest in equity   79 66 
total equity   9654 9398 
d finch group chief executive 
j k maiden group finance director  
29 february 2012  group statement of changes in equity  
for the year ended 31 december 2011 
 
79
financial statements 
group statement of changes in equity 
 
 
share  
capital  
£m 
share 
premium 
account  
£m 
capital 
redemption 
reserve
 £m 
own 
shares 
note 32
£m 
other 
reserves 
note 33 
£m 
retained 
earnings 
£m 
total  
£m 
non
controlling 
interests
 £m 
total 
equity 
£m 
at 1 january 2011  256 5327 02 141 1251 2637 9332 66 9398 
shares purchased  – – – 27 – – 27 – 27
own shares released to satisfy 
employee share schemes  – – – 28 – 28 – – – 
total comprehensive income  – – – – 252 931 679 11 690 
sharebased payments  – – – – – 50 50 – 50 
tax on sharebased payments  – – – – – 01 01 – 01
dividends – – – – – 458 458 – 458
dividends paid to non
controlling interest – – – – – – – 03 03
purchase of noncontrolling 
interests – – – – – – – 05 05 
at 31 december 2011  256 5327 02 140 999 3131 9575 79 9654 
 
 
share  
capital  
£m 
share 
premium 
account  
£m 
capital 
redemption 
reserve
 £m 
own 
shares 
note 32
£m 
other 
reserves 
note 33 
£m 
retained 
earnings 
£m 
total  
£m 
non
controlling 
interests
 £m 
total 
equity 
£m 
at 1 january 2010  256 5332 02 146 1161 1758 8363 60 8423 
costs of rights issue  – 05 – – – – 05 – 05
shares purchased  – – – 17 – – 17 – 17
own shares released to satisfy 
employee share schemes  – – – 22 – 22 – – – 
total comprehensive income  – – – – 90 859 949 07 956 
sharebased payments  – – – – – 39 39 – 39 
tax on sharebased payments  – – – – – 03 03 – 03 
dividends paid to non
controlling interest – – – – – – – 01 01
at 31 december 2010  256 5327 02 141 1251 2637 9332 66 9398 
  group statement of cash flows  
for the year ended 31 december 2011 80
 
 note 
2011  
£m 
2010 
£m 
cash generated from operations  37  2470 2221 
tax paid  84 86
net cash from operating activities   2386 2135 
cash flows from investing activities  
 
 
payments to acquire businesses net of cash acquired  19a 04 01 
deferred consideration for businesses acquired and disposed 19ab 57 24
purchase of property plant and equipment   1045 499
proceeds from disposal of property plant and equipment   63 74 
payments to acquire intangible assets  14  39 20
payments to acquire available for sale investments  – 03
receipts in respect of discontinued operations  11  – 03 
dividends received from associates  10 02 
interest received   56 11 
net cash used in investing activities   1016 455
cash flows from financing activities  
 
 
payments incurred on the issue of ordinary shares  – 38
purchase of treasury shares   27 17
interest paid   502 438
finance lease principal payments   249 187
net loans repaid   356 740
payments for the maturity of foreign currency contracts  128 20
dividends paid to noncontrolling interests   04 – 
payments for equity in noncontrolling interests  05 – 
dividends paid to shareholders of the company   458 – 
net cash used in financing activities   1729 1440
decreaseincrease in cash and cash equivalents   359 240 
opening cash and cash equivalents   1288 1058 
decreaseincrease in cash and cash equivalents   359 240 
foreign exchange   04 10
closing cash and cash equivalents  23  925 1288 
  notes to the consolidated accounts  
for the year ended 31 december 2011 
 
81
financial statements 
notes to the consolidated accounts 
1 corporate information  
the consolidated accounts of national express group plc and its subsidiaries ‘the group’ for the year ended 31 december 
2011 were authorised for issue in accordance with a resolution of the directors on 29 february 2012 national express  
group plc is a public limited company incorporated in england and wales whose shares are publicly traded on the london 
stock exchange  
the principal activities of the group are described in the business review that accompanies these accounts  
2 accounting policies  
statement of compliance  
these accounts have been prepared in accordance with international financial reporting standards ifrs and interpretations  
of the international financial reporting interpretations committee ifric as adopted by the european union eu and with those 
parts of the companies acts 2006 applicable to companies reporting under ifrs  
the group has previously disclosed that its accounting policy relating to the railways pension scheme rps represents a 
departure from the requirements of ias 19 this was principally based on an assessment performed at the time of adoption  
of ifrs in 2005 during the current period the directors have reviewed the accounting standards and current industry practice 
and have concluded that the group’s accounting policy complies with ias 19 
basis of preparation  
the financial statements have been prepared on the going concern basis see directors’ report on page 71 under the historical 
cost convention except for the recognition of derivative financial instruments and available for sale investments  
the consolidated accounts are presented in pounds sterling and all values are rounded to the nearest one hundred thousand 
pounds £01m except where otherwise indicated  
a summary of the group’s accounting policies applied in preparing the accounts for the year ended 31 december 2011 is set 
out below 
significant accounting judgements and key sources of estimation uncertainty 
the preparation of accounts in conformity with generally accepted accounting principles requires the use of estimates and 
assumptions that affect the reported amounts of assets and liabilities at the date of the accounts and the reported amounts  
of revenues and expenses during the reporting period although these estimates are based on management’s best knowledge 
actual results may ultimately differ from those estimates  
the most significant judgements were 
tax provisions 
assessing the outcome of uncertain tax positions requires judgements to be made regarding the result of negotiations with and 
enquires from tax authorities in a number of jurisdictions the assessments made are based on advice from independent tax 
advisors and the status of ongoing discussions with the relevant tax authorities 
the key accounting estimates are 
goodwill and impairment 
determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating units to which 
goodwill has been allocated the value in use calculation requires the entity to estimate the future cash flows expected to arise 
from the cashgenerating unit and a suitable discount rate in order to calculate present value details of the assumptions used 
are set out in note 14 to the accounts 
retirement benefit obligations 
determining the amount of the group’s retirement benefit obligations and the net costs of providing such benefits requires 
assumptions to be made concerning longterm interest rates inflation salary and pension increases investment returns and 
longevity of current and future pensioners changes in these assumptions could significantly impact the amount of the 
obligations or the cost of providing such benefits the group makes assumptions concerning these matters with the assistance 
of advice from independent qualified actuaries details of the assumptions made are set out in note 34 
insurance  
the estimation of the insurance provisions is based on an assessment of the expected settlement on known claims together with 
an estimate of settlements that will be made in respect of incidents occurring prior to the balance sheet date but for which claims 
have not been reported to the group   notes to the consolidated accounts  
82
2 accounting policies continued 
basis of consolidation  
the consolidated accounts comprise the accounts of national express group plc and all its subsidiaries drawn up to 
31 december each year adjustments are made to bring any dissimilar accounting policies that may exist into line with the 
group’s accounting policies  
on acquisition of a business the purchase method of accounting is adopted and the group income statement includes the 
results of subsidiaries and businesses purchased during the year from the date control is assumed the purchase consideration 
is allocated to assets and liabilities on the basis of fair value at the date of acquisition on the sale of a business the group 
income statement includes the results of that business to the date of disposal  
intragroup transactions balances and unrealised gains and losses on transactions between group companies are eliminated  
noncontrolling interests represent the portion of comprehensive income and equity in subsidiaries that is not attributable to the 
parent company shareholders and is presented separately from parent shareholders’ equity in the consolidated balance sheet  
interests in joint ventures  
the group has a number of contractual arrangements with other parties to share control of other entities which represent  
joint ventures  
the group recognises its interest in the entity’s assets and liabilities using the equity method of accounting the group balance 
sheet includes the appropriate share of these joint ventures’ net assets or liabilities and the income statement includes the 
appropriate share of their results after tax  
accounts of jointly controlled entities are prepared for the same reporting period as the group adjustments are made in the 
group’s accounts to eliminate the group’s share of unrealised gains and losses on transactions between the group and its 
jointly controlled entities the group ceases to use the equity method from the date it no longer has joint control over the entity  
interests in associates  
companies other than subsidiaries and joint ventures in which the group has an investment representing not less than 20  
of the voting rights and over which it exerts significant influence are treated as associates the consolidated accounts include  
the appropriate share of these associates’ results and net assets based on their latest accounts under the equity method  
changes in accounting policies  
the accounting policies adopted are consistent with those of the previous financial year and there have been no changes in 
accounting standards during the year that have had a material effect on the group 
income statement presentation  
the income statement has been presented in a columnar format to enable users of the financial statements to view the 
normalised results of the group normalised results are defined as the statutory results before the following as appropriate  
profit or loss on the sale of businesses exceptional profit or loss on the sale of noncurrent assets and charges for goodwill 
impairment amortisation of intangible assets exceptional items and tax relief on qualifying exceptional items and intangibles  
exceptional items  
exceptional items are material items of income or expenditure which in the opinion of the directors due to their nature and 
infrequency require separate identification on the face of the income statement to allow a better understanding of the financial 
performance in the year in comparison to prior years  
continued   
 
 
83
financial statements 
notes to the consolidated accounts 
2 accounting policies continued 
revenue recognition  
rendering of services  
revenue comprises income from road passenger transport train passenger services and related activities in the uk north 
america and europe where appropriate amounts are shown net of rebates and sales tax  
revenue is recognised by reference to the stage of completion of the customer’s travel or services provided under contractual 
arrangements as a proportion of total services to be provided  
uk rail revenue includes amounts attributed to the train operating companies tocs based principally on agreed models  
of route usage by railway settlement plan limited which administers the income allocation system within the uk rail industry  
in respect of passenger receipts in addition net franchise agreement receipts from the department for transport rail division 
dft rail and local passenger transport executives ptes are treated as revenue net franchise agreement payments to dft rail 
are recognised in operating costs uk coach revenue comprises amounts receivable generated from ticket sales uk bus and 
european coach  bus revenue comprises amounts receivable generated from ticket sales and revenue generated from  
services provided on behalf of local transport authorities which is recognised as the services are provided for all the divisions 
noted above the relevant share of season ticket or travelcard income is deferred within liabilities and released to the income 
statement over the life of the relevant season ticket or travelcard north american bus revenue from school boards and similar 
contracts is recognised as the services are provided  
rental income  
rental income is accounted for on a straightline basis over the lease term  
finance income  
revenue is recognised using the effective interest method  
government grants  
government grants relating to property plant and equipment are included in liabilities as deferred income and are credited to  
the income statement over the expected useful economic life of the assets concerned other grants are credited to the income 
statement as the related expenditure is expensed  
segmental reporting  
each of the group’s business and geographical segments provides services that are subject to risks and returns that are 
different from those of the other business segments due to the nature of the group’s operations the distinct business segments 
align directly with geographical segments which are operating in separate economic environments  
the group’s segments comprise uk bus uk coach uk rail north american bus european coach  bus and central 
functions these segments are described in more detail in the operating review accompanying these accounts  
leases  
leases of property plant and equipment where substantially all the risks and rewards of ownership of the asset have passed  
to the group are capitalised in the balance sheet as property plant and equipment finance leases are capitalised at the lower 
of the fair value of the leased property and the present value of the minimum lease payments the capital element of future 
obligations under hire purchase contracts and finance leases is included as a liability in the balance sheet the interest element  
of rental obligations is charged to the income statement over the period of the lease and represents a constant proportion of the 
balance of capital repayments outstanding property plant and equipment acquired under finance leases are depreciated over 
the shorter of the useful life of the asset or the lease term  
leases of property plant and equipment where a significant portion of the risks and rewards of ownership are retained by  
the lessor are classified as operating leases rentals paid under operating leases are charged to the income statement on a 
straightline basis over the term of the lease incentives received under operating leases and initial direct costs in negotiating  
the lease are amortised to the income statement on a straightline basis over the term of the lease  
all material arrangements and transactions entered into by the group are reviewed to check whether they contain elements  
that meet the accounting definition of a lease although they may not follow the legal form of a lease   notes to the consolidated accounts  
84
2 accounting policies continued 
borrowing costs  
borrowing costs are recognised as an expense when incurred except where they are directly attributable to the acquisition 
construction or production of a qualifying asset in which case they are capitalised as part of the cost of that asset 
current tax and deferred tax  
current tax is provided on taxable profits earned according to the local tax rates applicable where the profits are earned  
income taxes are recognised in the income statement unless they relate to an item accounted for in other comprehensive  
income or equity in which case the tax is recognised directly in other comprehensive income or equity the tax rates and  
tax laws used to compute the current tax are those that are enacted or substantively enacted by the balance sheet date  
deferred tax is provided in full in respect of all material temporary differences at the balance sheet date between the tax bases  
of assets and liabilities and their carrying amounts for financial reporting purposes apart from the following exceptions  
• where the temporary difference arises from the initial recognition of goodwill  
• where an asset or liability is recognised in a transaction that is not a business combination and that at the time of the 
transaction affects neither accounting nor taxable profit or loss and  
• in respect of investment in subsidiaries associates and joint ventures where the group is able to control the reversal  
of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future  
deferred tax is measured on a nondiscounted basis at tax rates that are expected to apply in the periods in which the temporary 
differences reverse based on tax rates and laws enacted or substantively enacted at the balance sheet date  
deferred tax assets are recognised to the extent that it is considered more likely than not that future taxable profits will be 
available against which the underlying temporary differences can be deducted their carrying amount is reviewed at each 
balance sheet date on the same basis 
deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and when the 
group intends to settle its current tax assets and liabilities on a net basis  
intangible assets  
intangible assets acquired separately that meet the recognition criteria of ias 38 ‘intangible assets’ are capitalised at cost  
and when acquired in a business combination are capitalised at fair value at the date of acquisition following initial recognition 
finite life assets are amortised on a straightline basis and indefinite life assets are not amortised the amortisation expense is 
taken to the income statement through operating expenses  
the existing finite life intangible assets have a residual value of nil and are amortised over their estimated useful lives as follows  
intangible assets with indefinite lives are tested annually for impairment and the useful lives of finite life intangible assets are 
examined on an annual basis and adjustments where applicable are made on a prospective basis finite life assets are reviewed 
for impairment where indicators of impairment exist 
the group’s indefinite life intangible assets include customer relationships and goodwill customer relationship intangible assets 
are recognised only on contracts where historical experience has shown that these contracts are consistently renewed  
customer contracts  – over the life of the contract between 1 and 33 years  
right to operate toc franchises  – over the life of the franchise between 1 and 7 years  
continued   
 
 
85
financial statements 
notes to the consolidated accounts 
2 accounting policies continued 
software  
computer software that is not integral to an item of property plant and equipment is recognised separately as an intangible asset 
and is carried at cost less accumulated amortisation and accumulated impairment losses costs include software licences 
consulting costs attributable to the development design and implementation of the computer software and internal costs directly 
attributable to the development design and implementation of the computer software costs in respect of training are expensed 
as incurred amortisation is calculated using the straightline method so as to charge the cost of the computer software to the 
income statement over its estimated useful life seven years  
the carrying value of intangibles is reviewed for impairment if events or changes in circumstances indicate that the carrying value 
may not be recoverable  
goodwill  
goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the group’s 
interest in the net fair value of the identifiable assets liabilities and contingent liabilities following initial recognition goodwill is 
stated at historic cost less any accumulated impairment if an acquisition gives rise to an excess of the acquirer’s interest in the 
net fair value of the acquiree’s identifiable assets liabilities and contingent liabilities over cost previously referred to as negative 
goodwill this is credited immediately to the income statement  
in accordance with ifrs 3 goodwill is not amortised all goodwill is subject to an annual test of impairment and an impairment 
charge recognised as required  
fair value accounting adjustments are made in respect of acquisitions fair value adjustments based on provisional estimates are 
amended within one year of the acquisition if required with a corresponding adjustment to goodwill in order to refine 
adjustments to reflect further evidence gained post acquisition  
where goodwill forms part of a cashgenerating unit and all or part of that unit is disposed of the associated goodwill is included 
in the carrying amount of the operation when determining the gain or loss on the disposal of the operation  
property plant and equipment  
all property plant and equipment is stated at historic cost less accumulated depreciation and accumulated impairment losses 
under the transitional arrangements of ifrs 1 the group elected to deem the fair value of certain revalued assets to be 
equivalent to cost  
land and buildings comprise mainly vehicle depots and garages and offices freehold land is not depreciated other property 
plant and equipment are depreciated on a straightline basis over their estimated useful lives as follows  
useful lives and residual values are reviewed annually and adjustments where applicable are made on a prospective basis 
repairs and maintenance are charged to the income statement during the financial period in which they are incurred  
an item of property plant and equipment is derecognised upon disposal or when no future economic benefits are expected  
to arise from the continued use of the asset any gain or loss arising on the derecognition of the asset is included in the income 
statement in the period of derecognition  
freehold buildings  – 30 to 50 years  
long leasehold property improvements  – 15 to 40 years  
public service vehicles  – 8 to 15 years  
plant and equipment fixtures and fittings  – 3 to 15 years   notes to the consolidated accounts  
86
2 accounting policies continued 
impairment of nonfinancial assets  
all noncurrent assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying 
amount may not be recoverable except for indefinite life intangible assets and goodwill which are reviewed annually an 
impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which  
is the higher of an asset’s fair value less costs to sell and its value in use for the purposes of assessing impairment assets are 
grouped at the lowest level for which there are separately identifiable cash inflows  
in assessing value in use the estimated risk adjusted future cash flows are discounted to their present value using a pretax 
discount rate that reflects current market assessments of the time value of money impairment losses are recognised in the 
income statement in expense categories consistent with the function of the impaired asset  
except for goodwill impairments a review is made at each reporting date of any previous impairment losses to assess whether 
they no longer exist or may have decreased if such indication exists the asset’s recoverable amount is estimated and any 
previously recognised impairment loss is reversed only if there has been a change in the estimates used to assess the 
recoverable amount since the last impairment loss was recognised if that is the case the carrying amount of the asset is 
increased subject to a limit of the asset’s net book value had no previous impairment loss been recognised such reversal is 
recognised in the income statement future depreciation or amortisation is then adjusted to allocate the asset’s revised carrying 
amount over its remaining useful economic life impairments to goodwill cannot be reversed  
financial instruments  
the group determines the classification of its financial instruments at initial recognition the group classifies its financial assets  
in the following categories at fair value through profit or loss loans and receivables and availableforsale the classification 
depends on the purpose for which the financial assets were acquired  
financial assets at fair value through profit or loss  
financial assets at fair value through profit or loss are financial assets held for trading a financial asset is classified in this 
category if acquired principally for the purpose of selling in the short term derivatives are also categorised as held for trading 
unless they are designated as hedges assets in this category are classified as current assets  
financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed 
in the income statement gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit 
or loss’ category are presented in the income statement within finance costs in the period in which they arise  
loans and receivables  
loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active 
market they are included in current assets except for maturities greater than 12 months after the balance sheet date which  
are classified as noncurrent assets the group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash  
and cash equivalents’ in the balance sheet  
availableforsale financial assets  
availableforsale financial assets are nonderivatives that are either designated in this category or not classified in any of the 
other categories they are included in noncurrent assets unless management intends to dispose of the investment within  
12 months of the balance sheet date  
the group’s investments in entities that are not subsidiaries associates or joint ventures are classified as availableforsale 
financial assets after initial recognition these assets are measured at fair value with gains or losses being recognised as a 
separate component of equity until the investment is derecognised or the investment is determined to be impaired at which  
time the previously reported cumulative gain or loss is included in the income statement where there is no active market for  
the group’s investments fair value is determined using valuation techniques including recent commercial transactions and 
discounted cash flow analyses in the absence of any other reliable external information assets are carried at cost or amortised 
cost as appropriate  
the group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial 
assets is impaired in the case of equity securities classified as available for sale a significant or prolonged decline in the fair 
value of the security below its cost is considered as an indicator that the securities are impaired if any such evidence exists for 
availableforsale financial assets the cumulative loss – measured as the difference between the acquisition cost and the current 
fair value less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and 
recognised in the income statement impairment losses recognised in the income statement on equity instruments are not 
reversed through the income statement 
continued   
 
 
87
financial statements 
notes to the consolidated accounts 
2 accounting policies continued 
derivative financial instruments  
the group uses derivative financial instruments such as foreign currency forward exchange contracts fuel derivatives and 
interest rate swaps to hedge its risks associated with foreign currency fuel price and interest rate fluctuations such derivative 
financial instruments are initially recognised at fair value and subsequently remeasured to fair value for the reported balance 
sheet the fair value of foreign currency forward exchange contracts interest rate and fuel derivatives is calculated by reference 
to market exchange rates interest rates and fuel prices at the period end  
the group’s fuel derivatives are designated as cash flow hedges the portion of the gain or loss on the hedging instrument that 
is determined to be an effective hedge is recognised directly in equity and the ineffective portion in the income statement the 
gains or losses deferred in equity in this way are recycled through the income statement in the same period in which the hedged 
underlying transaction or firm commitment is recognised in the income statement  
the group’s interest rate swaps are designated as fair value hedges the gain or loss on the hedging instrument is recognised 
immediately in the income statement the carrying amount of the hedged item is adjusted through the income statement for the 
gain or loss on the hedged item attributable to the hedged risk in this case movements in the risk free interest rate 
foreign currency derivatives are used to hedge the group’s net investment in foreign currency denominated operations and  
to the extent they are designated and effective as net investment hedges are matched in equity against foreign exchange 
exposure in the related assets and liabilities gains and losses accumulated in equity are included in the income statement when 
the foreign operation is partially disposed of or sold foreign currency forward contracts are also used to hedge transactional 
exposures these contacts are not hedge accounted and all gains and losses are taken direct directly to the income statement 
for derivatives that do not qualify for hedge accounting gains or losses are taken directly to the income statement in  
the period  
hedge accounting is discontinued when the hedging instrument expires is sold terminated exercised or no longer qualifies  
for hedge accounting  
inventories  
inventories are valued at the lower of cost and net realisable value on a fifo basis after making due allowance for obsolete  
or slow moving items 
precontract costs  
precontract costs associated with securing new rail franchises are expensed as incurred up to the point when a franchise is 
awarded from this point in time they are recognised as an asset and are expensed to the income statement over the life of the 
franchise costs associated with the commencement of all new contracts other than rail franchises are expensed as incurred  
trade and other receivables  
trade and other receivables are recognised and carried at original invoice amount less an allowance for any uncollectible 
amounts doubtful debts are provided for when collection of the full amount is no longer probable whilst bad debts are written 
off when identified  
cash and cash equivalents  
cash and cash equivalents as defined for the cash flow statement comprise cash in hand cash held at bank with immediate 
access other shortterm investments and bank deposits with maturities of three months or less from the date of inception  
and bank overdrafts in the consolidated balance sheet cash includes cash and cash equivalents excluding bank overdrafts 
bank overdrafts that have no legal right of setoff against cash and cash equivalents are included within borrowings in  
current liabilities  
trade and other payables  
trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective  
interest method  
interestbearing borrowings  
all loans and borrowings are initially recognised at cost being the net fair value of the consideration received plus transaction 
costs that are directly attributable to the issue of the financial asset or liability after initial recognition interestbearing loans  
and borrowings are subsequently measured at amortised cost using the effective interest method   notes to the consolidated accounts  
88
2 accounting policies continued 
insurance  
the group’s policy is to selfinsure high frequency claims within the businesses to provide protection above these types of 
losses the group purchases insurance cover from a selection of proven and financially strong insurers the insurance provision  
is based on estimated exposures at the year end principally for claims arising in the uk and north america prior to the yearend 
date subject to the overall stop loss within the group’s insurance arrangements the majority of provisions will be utilised within 
six years and the provision has been discounted to take account of the expected timing of future cash settlements  
pensions and other postemployment benefits  
the group has a number of pension schemes both of a defined benefit and defined contribution nature full details are provided 
in note 34  
the balance sheet position in respect of defined benefit schemes comprises the net value for each scheme of the present value 
of the relevant defined benefit obligation at the balance sheet date less the fair value of plan assets the trustees complete a full 
actuarial valuation triennially separately for each plan but the obligation is updated annually for financial reporting purposes by 
independent actuaries using the projected unit credit method the present value of the obligation is determined by the estimated 
future cash outflows discounted using interest rates of high quality corporate bonds which have terms to maturity equivalent to 
the terms of the related liability  
the current service cost and gains and losses on settlements and curtailments are recognised in staff pension costs within 
operating costs in the income statement past service costs are included in operating costs where the benefits have vested 
otherwise they are amortised on a straightline basis over the vesting period the finance elements of the pension cost 
comprising the expected return on assets of funded defined benefit schemes and the interest on pension scheme liabilities  
are also included in operating costs actuarial gains and losses arising from experience adjustments and changes in actuarial 
assumptions are charged or credited to other comprehensive income in the period in which they arise  
our tocs participate in the rps a defined benefit scheme which covers the whole of the uk rail industry this is partitioned  
into sections and the group is responsible for the funding of these sections whilst it operates the relevant franchise in contrast  
to the pension schemes operated by most businesses the rps is a shared cost scheme which means that costs are formally 
shared 60 by the employer and 40 by the employee a liability is recognised in line with other defined benefit schemes in the 
group although this is offset by a franchise adjustment so that the net liability represents the deficit that the group expects to 
fund during the franchise term  
the charges in respect of defined contribution schemes are recognised when they are due the group has no legal or 
constructive obligation to pay further contributions into a defined contribution scheme if the fund has insufficient assets to pay  
all employees benefits relating to employee service in the current and prior periods  
sharebased payment  
the group awards equitysettled sharebased payments to certain employees under which the group receives services from 
employees as consideration for equity instruments options of the group the fair value of the employee services received in 
exchange for the grant of the options is recognised as an expense the total amount to be expensed is determined by reference 
to the fair value of the options granted excluding the impact of any nonmarket service and performance vesting conditions  
for example profitability sales growth targets and remaining an employee of the entity over a specified time period nonmarket 
vesting conditions are included in assumptions about the number of options that are expected to vest the total amount 
expensed is recognised over the vesting period which is the period over which all of the specified vesting conditions are to be 
satisfied at each balance sheet date the entity revises its estimates of the number of options that are expected to vest based  
on the nonmarket vesting conditions it recognises the impact of the revision to original estimates if any in the income 
statement with a corresponding adjustment to equity  
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 a reliable estimate of the amount can be  
made provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance 
sheet date and are discounted to present value where the effect is material using a pretax discount rate the amortisation  
of the discount is recognised as a finance cost  
contingent liabilities are obligations that arise from past events that are dependent on future events they are disclosed in the 
notes to the accounts where the expected future outflow is not probable  
continued   
 
 
89
financial statements 
notes to the consolidated accounts 
2 accounting policies continued 
share capital share premium and dividends  
where either the company or employee share trusts purchase the company’s equity share capital the consideration paid 
including any transaction costs is deducted from total shareholders’ equity as own shares until they are cancelled or reissued 
any consideration subsequently received on sale or reissue is included in shareholders’ equity  
dividend distributions to the company’s shareholders are recognised as a liability in the group’s accounts on the date when 
dividends are approved by the company’s shareholders interim dividends are recognised in the period they are paid  
noncurrent assets held for sale and discontinued operations  
noncurrent assets or disposal groups are classified as assets held for sale when their carrying amount is to be recovered 
principally through a sale transaction and a sale is considered highly probable they are stated at the lower of carrying amount 
and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than 
through continuing use  
a discontinued operation is a component of the group that has been disposed of or is classified as held for sale and it either 
represents a separate major line of business or geographical area is part of a plan to dispose of a separate major line of 
business or geographical area or was an acquired subsidiary intended for resale the resulting profit or loss from discontinued 
operations is reported separately in the income statement  
property plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised  
foreign currencies  
the trading results of foreign currency denominated subsidiaries joint ventures and associates are translated into sterling  
the presentation currency of the group and functional currency of the parent using average rates of exchange for the year  
as a reasonable approximation to actual exchange rates at the dates of transactions  
the balance sheets of foreign currency denominated subsidiaries joint ventures and associates are translated into sterling  
at the rates of exchange ruling at the year end and exchange differences arising are taken directly to the translation reserve in 
equity on disposal of a foreign currency denominated subsidiary the deferred cumulative amount recognised in the translation 
reserve since 1 january 2004 under the transitional rules of ifrs 1 relating to that entity is recognised in the income statement 
all other translation differences are taken to the income statement with the exception of differences on foreign currency 
borrowings and forward foreign currency contracts which are used to provide a hedge against the group net investments in 
foreign enterprises these are taken directly to equity until the disposal of the net investment at which time they are recognised 
in the income statement  
new standards and interpretations not applied  
the iasb and ifric have issued the following standards interpretations and amendments with an effective date after the  
date of these financial statements which the directors expect may have a material impact on the accounts of the group in  
future periods 
ifrs 10 consolidated financial statements effective for annual periods beginning on or after 1 january 2013 – the standard 
establishes the principles for the presentation of consolidated accounts when an entity controls one or more other entities 
ifrs 11 joint arrangements effective for annual periods beginning on or after 1 january 2013 – the standard determines the 
type of joint arrangement by assessing the rights and obligations and accounts for those rights and obligations in accordance 
with that type of joint arrangement 
ifrs 12 disclosure of interests in other entities effective for annual periods beginning on or after 1 january 2013 – the standard 
sets out the requirements to disclose information that enables users of accounts to evaluate the nature of and risks associated 
with its interests in other entities and the effects of these interests on its financial position financial performance and cash flows  
ifrs 13 fair value measurement effective for annual periods beginning on or after 1 january 2013 – the standard defines fair 
value and a framework for measuring fair value 
ias 19 employee benefits revised effective for annual periods beginning on or after 1 january 2013 – the standard will impact 
the measurement of the various components representing movements in the defined benefit pension obligation and associated 
disclosures but not the group’s total obligation it is likely that following the replacement of expected returns on plan assets  
with a net finance cost in the income statement the profit for the period will be reduced and accordingly other comprehensive 
income increased 
ifrs 9 financial instruments effective for annual periods beginning on or after 1 january 2015 – the standard deals with the 
classification recognition and measurement of financial assets and liabilities but has yet to be adopted by the eu   notes to the consolidated accounts  
90
3 exchange rates 
the most significant exchange rates to uk sterling for the group are as follows 
if the results for the year to 31 december 2010 had been retranslated at the average exchange rates for the year to 
31 december 2011 north american bus would have achieved normalised operating profit of £358m on revenue of £4479m 
compared to normalised operating profit of £369m on revenue of £4598m as reported and european bus  coach would have 
achieved a normalised operating profit of £872m on revenue of £5314m compared to normalised operating profit of £862m  
on revenue of £5256m as reported 
4 revenue 
5 segmental analysis 
the operating businesses are organised and managed separately according to the nature of the public transport services they 
provide and the geographical market they operate in commentary on the segments is included in the business review 
analysis by class and geography of business 
intersegment sales represent rail replacement services provided to uk rail by uk bus and uk coach intersegment trading  
is undertaken on standard arm’s length commercial terms due to the nature of the group’s businesses the origin and 
destination of revenue is the same no single external customer amounts to 10 or more of the total revenue 
 
2011 
closing rate 
2011 
average rate 
2010  
closing rate 
2010 
average rate 
us dollar  155 161 156 155 
canadian dollar  158 158 156 161 
euro  120 115 117 117 
 
2011 
 £m 
2010
 £m 
rendering of services  22313 21188 
rental income  67 71 
revenue  22380 21259 
finance income  67 48 
total revenue from continuing operations  22447 21307 
 
external 
revenue 
2011 
£m 
intersegment 
sales 
2011 
£m 
segment 
revenue 
2011 
£m 
external  
revenue  
2010  
£m 
intersegment 
sales  
2010 
 £m 
segment 
revenue 
2010 
£m 
uk bus  2631 04 2635 2573 05 2578 
uk coach  2545 46 2591 2457 46 2503 
uk rail  6883 – 6883 6375 – 6375 
intersegment sales elimination  – 50 50 – 51 51
uk operations  12059 – 12059 11405 – 11405 
north american bus  4810 – 4810 4598 – 4598 
european coach  bus  5511 – 5511 5256 – 5256 
total revenue  22380 – 22380 21259 – 21259 
continued   
 
 
91
financial statements 
notes to the consolidated accounts 
5 segmental analysis continued 
one off project related costs of £92m have been charged within operating costs £52m relates to the settlement and associated 
legal expenses of a working time claim in north america the remainder relates to external fees in response to the competition 
commission enquiry into the uk bus industry costs associated with the acquisition of petermann and professional fees relating 
to the strategic and board debate ahead of the 2011 annual general meeting 
  continuing discontinued  continuing discontinued 
 
normalised 
operating 
profit 
2011 
£m 
intangible 
amortisation 
and  
exceptional 
items  
2011 
£m 
segment 
result 
2011
£m 
segment 
result 
2011
£m 
normalised 
operating 
profit 
2010 
£m 
intangible 
amortisation  
and  
exceptional  
items  
2010 
£m 
segment  
result  
2010 
£m 
segment 
result 
2010
£m 
uk bus  327 – 327  283 67 216  
uk coach  349 – 349  320 01 319  
uk rail  434 17 417  338 207 131  
uk operations  1110 17 1093  941 275 666  
north american bus  479 33 446  369 343 26  
european coach  
 bus  901 458 443  862 478 384  
central functions 146 – 146 130 87 217  
project costs  92 – 92 – – –  
result from 
continuing operations 2252 508 1744  2042 1183 859  
result from 
discontinued 
operations    – –   – 05
total result    1744 –   859 05
loss on disposal of 
noncurrent assets    – –   – – 
profitloss from 
operations    1744 –   859 05
share of post tax 
results from associates 
and joint ventures   14 –   03 – 
net finance costs    464 –   460 – 
profitloss before tax    1294 –   402 05
tax chargecredit    268 –   225 01 
profitloss for the year   1026 –   627 04 notes to the consolidated accounts  
92
5 segmental analysis continued 
intangible asset amortisation and operating exceptional items can be analysed by class and location of business as follows 
 
intangible 
asset 
amortisation  
2011  
£m 
operating 
exceptional  
items  
2011  
£m  
total 
2011 
£m 
uk bus  – – – 
uk coach  – – – 
uk rail  17 – 17 
north american bus  33 – 33 
european coach  bus  458 – 458 
central functions  – – – 
total continued operations  508 – 508 
discontinued operations note 11  – – – 
total  508 – 508 
 
there have been no exceptional costs incurred during 2011 
in the year to 31 december 2010 exceptional costs of £183m were incurred in uk rail this comprised additional costs 
following a full and final settlement with the department for transport in relation to the national express east coast franchise  
exit and costs associated with related contracts  
exceptional restructuring and redundancy costs of £257m were incurred in north american bus in delivering the business 
recovery programme  
restructuring costs of £153m were incurred in the uk following changes in management in uk coach and central functions 
the relocation of the head office from london to birmingham and other operational and corporate projects in addition 
rationalisation costs of £19m were incurred in european coach  bus 
 
intangible 
asset 
amortisation  
2010  
£m 
operating 
exceptional  
items  
2010  
£m  
total 
2010 
£m 
uk bus  – 67 67 
uk coach  02 01 01 
uk rail  24 183 207 
north american bus  86 257 343 
european coach  bus  459 19 478 
central functions  – 87 87 
total continued operations  571 612 1183 
discontinued operations note 11  – 05 05 
total  571 617 1188 
continued   
 
 
93
financial statements 
notes to the consolidated accounts 
5 segmental analysis continued 
assets liabilities and capital expenditure can be analysed by class and geography of business as follows 
   noncurrent assets only include intangible assets property plant and equipment 
 the net capital expenditure after allowing for the movements in capital creditors disposal of fixed assets and payments to acquire intangibles  
was £1458m 2010 £1216m 
capital expenditure comprises property plant and equipment additions as disclosed above and in note 15 in 2011 software 
intangible assets of £13m 2010 £20m were acquired in north america and disclosed in note 14 
unallocated assets and liabilities comprise the following items 
 
unallocated 
assets 
2011 
£m 
unallocated 
liabilities  
2011
£m 
unallocated 
assets  
2010  
£m 
unallocated 
liabilities 
2010 
£m 
cash and cash equivalents  925 – 1288 – 
other debt receivables 07 – 08 – 
current tax  09 197 34 121
noncurrent tax – 54 – 123
available for sale investments  76 – 78 – 
derivative financial assetsliabilities  521 26 255 175
borrowings excluding finance leases  – 6219 – 6379
dividend payable  – 05 – 05
deferred tax  – 952 28 869
total  1538 7453 1691 7672
 
 
assets  
2011  
£m 
of which 
noncurrent 
assets 
2011 
£m 
liabilities 
2011 
£m 
capital
expenditure 
2011 
£m 
assets 
2010 
£m 
of which  
noncurrent 
assets  
2010 
£m 
liabilities  
2010 
£m 
capital
 expenditure 
2010
£m 
uk bus  1377 1173 1056 240 1290 1093 850 88 
uk coach  721 531 434 128 574 455 389 54 
uk rail  716 113 1864 23 832 175 2026 30 
intercompany elimination  09 – 09 – 13 – 13 – 
uk operations  2805 1817 3345 391 2683 1723 3252 172 
north american bus  7201 6569 1686 631 7121 6428 1649 958 
european coach  bus  12444 11283 1504 545 12762 11831 1582 377 
central functions  331 01 677 01 117 01 821 01 
unallocated  1538 – 7453 – 1691 – 7672 – 
intercompany elimination  138 – 138 – 138 – 138 – 
total  24181 19670 14527 1568 24236 19983 14838 1508  notes to the consolidated accounts  
94
6 operating costs 
the tocs have fixed track access contracts with network rail infrastructure limited for access to the railway infrastructure 
tracks stations and depots the tocs also have contracts under which rolling stock is leased the capital element of the  
rolling stock lease charge is based on the purchase price capital funded refurbishments and modifications the noncapital 
element of the lease charge includes heavy maintenance charges and charges based on mileage 
an analysis of fees paid to the group’s auditors is provided below 
 
2011 
£m 
2010 
£m 
cost of inventories recognised in expense 660 758 
staff costs including exceptional cost of £nil 2010 £128m  8167 8018 
depreciation – owned assets  928 844 
 – leased assets  127 154 
amortisation of fixed asset grants  15 17
operating lease charges  rolling stock capital element 1012 874 
 rolling stock noncapital element  456 373 
 public service vehicles  43 44 
 other  76 109 
 – plant and equipment  1587 1400 
 fixed track access  573 570 
 other  333 419 
 – land and buildings  906 989 
foreign exchange differences 09 – 
other charges including exceptional expense of £nil 2010 £484m  7777 7683 
operating costs before intangible asset amortisation  20128 19829 
intangible asset amortisation  508 571 
total operating costs  20636 20400 
 
2011  
£m 
2010 
£m 
fees payable to the company’s auditors for the audit of the consolidated and  
parent company accounts  03 05 
fees payable to the company’s auditors and its associates for other services   
the audit of the company’s subsidiaries  06 07 
tax services  – 10 
corporate finance services  – 01 
other services  – 06 
 09 29 
continued   
 
 
95
financial statements 
notes to the consolidated accounts 
7 employee benefit costs 
a staff costs 
included within staff costs are exceptional costs of £nil 2010 £128m 
the average number of employees including executive directors during the year was as follows 
included in the above costs are the following costs related to the group’s key management personnel who comprise the 
directors of the parent company 
b share schemes 
details of options or awards outstanding as at 31 december 2011 under the group’s share schemes are as follows 
 
 
2011  
£m 
2010 
£m 
wages and salaries  7044 6918 
social security costs  956 908 
pension costs note 34  117 153 
sharebased payment note 8  50 39 
 8167 8018 
 2011  2010 
managerial and administrative  3318 3341 
operational  35603 34063 
 38921 37404 
 
2011  
£m 
2010 
£m 
fees  – 04
basic salaries  10 12
benefits  03 05
performancerelated bonuses  12 13
sharebased payment  10 13
 35 47
 
number of 
share options 
2011 
number of 
share options
2010 
exercise  
price  
future 
exercise 
periods 
executive share option plan  57042 149211 207p448p 20122014 
long term incentive plan  5093870 4043170 nil 20122014 
share matching plan  1026550 1037951 nil 20122014 
deferred annual share bonus plan  1075762 1027658 nil 20122014 
wmt long service option scheme – 7530 nil na 
wmt long service option scheme  296361 308330 129604p 20122020 
sharesave scheme  923603 1003187 479p 2012 
executive deferred benefit plan 88968 – nil 2012 
 8562156 7577037    notes to the consolidated accounts  
continued 96
7 employee benefit costs continued  
b share schemes continued  
i executive share option plan  
the company operates tax approved and unapproved executive share option schemes open to group employees in senior 
management positions options granted by this plan have a maximum term of 10 years the options vest after three years 
subject to the satisfaction of certain performance criteria
1
 based on the achievement of a target growth in earnings per share  
if the performance criteria are not met when initially tested in some instances they may be reassessed during the term of the 
option from 2005 executive share option grants have been replaced by awards made under the long term incentive plan  
as described in ii there are no cash settlement alternatives  
ii long term incentive plan ltip  
the ltip was introduced in 2005 on the recommendation of the remuneration committee to replace the annual award under 
the executive share option plan to executive directors and to certain senior employees under the ltip a performance award 
to acquire a specified number of free shares may be made to the employee or director in addition a matching award may be 
made as described in iii performance conditions are attached to the vesting of performance and matching awards based on 
both the achievement of target growth in earnings per share and the relative total shareholder return tsr of the company 
against a comparator group of companies if the performance conditions are met performance and matching awards vest on 
the third anniversary of the grant date and remain exercisable for a period of up to six months following the vesting date there 
are no cash settlement alternatives at present  
in 2011 an hmrc approved share option plan was added as an appendix to the ltip ‘approved plan’ a participant can only 
hold an option under the approved plan over shares with a market value of up to £30000 at the grant date options under the 
approved plan are granted in tandem with the usual options under the ltip the options are structured such that on exercise 
the proportion of the gain in respect of the first £30000 worth of shares as measured at the date of grant will be delivered 
under the approved option and the ltip option shall be scaled back to deliver the remaining gross gain that would have been 
delivered had the option been granted alone the excess shares under the ltip will be forfeited such that both awards will never 
become fully vested 
iii share matching plan the ‘plan’  
the share matching plan was introduced in 2005 as part of the new long term incentive plan arrangements described in ii 
under the plan a matching award to acquire a specified number of shares for free may be made if the employee pledges a 
number of shares as investment shares which are then matched by the company on up to a 21 basis with the number of shares 
that could have been purchased with the pretax equivalent of the amount invested the matching awards vest on the third 
anniversary of the grant date and remain exercisable for a period of up to six months following the vesting date there are no 
cash settlement alternatives at present  
iv deferred annual share bonus plan  
the deferred annual share bonus plan is a discretionary scheme which forms part of the bonus arrangements for certain senior 
employees under the scheme part of any bonus may be received in cash whilst the remainder is used to make an award of nil 
cost options which vest three years after the award date the options must be exercised within six months of vesting there are 
no cash settlement alternatives at present  
v west midlands travel ltd wmt long service option scheme  
the wmt long service option scheme utilises a fixed amount of shares set aside for this purpose following the acquisition of 
wmt in 1995 and is open to all wmt employees who have been in service for more than 25 years the options are exercisable 
between three and ten years following the grant date there are no cash settlement alternatives  
vi twm share incentive plan the ‘sip’  
the twm sip exists for the benefit of wmt employees at the end of the year 908 2010 908 national express group plc 
shares were held for the benefit of the trustee dividends on shares held in the sip forfeited shares account are waived there 
are no cash settlement alternatives    
 
 
97
financial statements 
notes to the consolidated accounts 
7 employee benefit costs continued  
b share schemes continued  
vii savings related share option scheme sharesave scheme  
the national express group approved sharesave scheme enabled eligible uk employees including executive directors to 
acquire shares in the company through monthly savings over a threeyear period at the end of which they also received a tax 
free bonus the savings and bonus could be used to purchase shares at a discounted option price set at the beginning of the 
savings contract the options matured three years after the grant date and could be exercised for a period of up to six months 
after this date there are no cash settlement alternatives  
1
 performance criteria for executive share option plan  
a options granted under the 2002 national express group executive share option plan part 2 unapproved  
b for options granted in 2002 and 2003 the performance condition is as follows a for awards up to 50 of salary eps growth of rpi  4 pa b 
for awards between 51 of salary and up to 100 of salary eps growth of rpi  6 pa c for awards between 101 of salary and up to 150 of 
salary eps growth of rpi  8 pa d for awards between 151 of salary and up to 200 of salary eps growth of rpi  10 pa parts a and b 
are initially tested over years 03 with a facility to retest over years 04 and 05 parts c and d are not subject to retesting straightline vesting 
occurs between eps levels  
c  for options granted in 2004 the performance condition is as follows a for awards up to 50 of salary eps growth of rpi  4 pa b for awards 
between 51 of salary and up to 100 of salary eps growth of rpi  5 pa c for awards between 101 of salary and up to 150 of salary eps 
growth of rpi  6 pa d for awards between 151 of salary and up to 200 of salary eps growth of rpi  10 pa performance is tested over 
years 03 straightline vesting occurs between eps levels retesting is not permitted 
viii executive deferred bonus plan 
as detailed in the directors’ remuneration report the committee considered it appropriate for bonuses awarded in respect  
of the calendar year to be deferred for a period of one year and that these would vest subject to the terms of the award and the 
relevant director’s continuing employment the deferred forfeitable ordinary shares are awarded under the terms of the national 
express group executive deferred bonus plan which was adopted by the board of the company on 10 march 2009  
the principal terms of awards under the executive deferred bonus plan are summarised below 
• awards under the plan may be cash awards conditional awards or forfeitable shares awards 
• awards normally vest one year from the date of grant subject to the relevant director’s continued employment with  
the company 
• the committee may decide that participants shall be entitled to receive a benefit determined by reference to the value of the 
dividends that would have been paid on the vested shares in respect of dividend record dates occurring during the period 
between the grant date and the date of vesting and 
• the awards will normally lapse on cessation of employment save in certain compassionate ‘good leaver’ circumstances  
eg death or disability 
in the event of a variation of the share capital of the company the committee may make such adjustments to the awards  
as it considers appropriate  notes to the consolidated accounts  
98
8 sharebased payment 
the charge in respect of sharebased payment transactions included in the group’s income statement for the year is as follows 
there were no exceptional costs included within the charge during the year 2010 £09m 
during the year ended 31 december 2011 the group had eight sharebased payment arrangements which are described  
in note 7b  
for the following disclosure share options with a nil exercise price have been disclosed separately to avoid distorting the 
weighted average exercise prices the number of share options in existence during the year was as follows 
1
 included within this balance are options over 21342 2010 92209 shares for which no expense has been recognised in accordance with the 
transitional provisions of ifrs 2 as the options were granted before 7 november 2002 although there has been subsequent modification to the 
options no ifrs 2 charge has been recognised as the amounts are not material 
the options outstanding at 31 december 2011 had exercise prices that were between 129p and 604p 2010 between 117p  
and 604p excluding options with a nil exercise price the range of exercise prices for options was as follows 
the options have a weighted average contractual life of one year 2010 one year options were exercised regularly throughout 
the year and the weighted average share price at exercise was 241p 2010 229p 
 
2011  
£m 
2010 
£m 
expense arising from share and share option plans – continuing operations  50 39 
  2011   2010 
 
number 
of share 
options 
weighted 
average 
exercise  
price  
p 
number  
of share  
options 
weighted 
average 
exercise 
price 
p 
options without a nil exercise price 
  
  
at 1 january  1460728 442 1900806 449 
granted during the year  14140 242 17820 116 
forfeited during the year  133551 410 424406 472 
exercised during the year 2735 143 2330 129 
expired during the year 61576 434 31162 345 
outstanding at 31 december
1
 1277006 445 1460728 442 
exercisable at 31 december  247755 241 359568 405 
options with a nil exercise price     
at 1 january  6116309 nil 5700517 nil 
granted during the year  4143972 nil 3272571 nil 
forfeited during the year  1245344 nil 1083685 nil 
exercised during the year  1172720 nil 1299223 nil 
expired during the year 557067 nil 473871 nil 
outstanding at 31 december  7285150 nil 6116309 nil 
exercisable at 31 december  444461  10357  
total outstanding at 31 december  8562156  7577037  
total exercisable at 31 december  692216  369925  
exercise price p  2011  2010 
0300  127710 132914 
300350 33483 40509 
350650 1115813 1287305 
 1277006 1460728 
continued   
 
 
99
financial statements 
notes to the consolidated accounts 
8 sharebased payment continued 
the weighted average fair value of the share options granted during the year was calculated using a stochastic model with the 
following assumptions and inputs 
experience to date has shown that approximately 24 2010 15 of options are exercised early principally due to leavers  
this has been incorporated into the calculation of the expected option life for the share options without nil exercise price 
expected volatility in the table above was determined from historical volatility over the last eight years adjusted for oneoff events 
that were not considered to be reflective of the volatility of the share price going forward the expected dividend yield represents 
the dividends declared in the 12 months preceding the date of the grant divided by the average share price in the month 
preceding the date of the grant 
for share options granted during the year under the ltip the tsr targets have been reflected in the calculation of the fair value 
of the options above 
9 net finance costs 
the 2010 exceptional charge of £20m relates to residual unamortised loan fees as a result of refinancing the group’s syndicated 
credit facility on 12 july 2010 the group’s £800m multicurrency syndicated credit facility maturity june 2011 was replaced 
with a new four year £500m facility the remaining unamortised fees relating to the £800m facility were taken to the income 
statement as an exceptional cost 
 share options without nil exercise price share options with nil exercise price 
 2011 2010 2011  2010 
risk free interest rate  270 1830 130144 1830 
expected volatility  364 376 515516 527 
peer group volatility  – – 551570 496508 
expected option life in years  8 years 8 years 3 years 3 years 
expected dividend yield  360 0 347364 0 
weighted average share price at grant date 242p 226p 242p 229p 
weighted average exercise price at grant date 242p 225p nil nil 
weighted average fair value of options at grant date 56p 76p 153p 202p 
 
normalised 
2011
 £m 
exceptional 
2011 
£m 
total 
2011 
£m 
normalised  
2010 
 £m 
exceptional  
2010 
£m 
total 
2010
£m 
bond and bank interest payable  462 – 462 437 20 457
finance lease interest payable  50 – 50 38 – 38
other interest payable  02 – 02 02 – 02
unwind of provision discounting  17 – 17 11 – 11
finance costs  531 – 531 488 20 508
other financial income 67 – 67 48 – 48 
net finance costs  464 – 464 440 20 460
of which from financial instruments    
cash and cash equivalents  01 – 01 04 – 04
financial liabilities measured at amortised 
cost  402 – 402 388 – 388
financial liabilities at fair value through profit 
or loss  – – – 02 – 02
derivatives used for hedging  38 – 38 05 – 05 
loan fee amortisation  22 – 22 25 20 45 notes to the consolidated accounts  
100
10 taxation 
a analysis of taxation chargecredit in the year 
b tax on items recognised in other comprehensive income or equity 
 
2011 
 £m 
2010
 £m 
current taxation 
 
 
creditdebit on exchange movements offset in reserves  70 60
 70 60
deferred taxation   
deferred tax credit on sharebased payment  01 03 
deferred tax creditdebit on actuarial lossesgains  04 98
deferred tax charge on cash flow hedges  06 66
deferred tax charge on exchange 41 – 
 42 161
 
 
2011 
 £m 
2010
 £m 
current taxation 
 
 
uk corporation tax  132 44 
overseas taxation  79 36 
current income tax charge  211 80 
adjustments with respect to prior years – uk and overseas 11 362
total current income tax chargecredit 200 282
deferred taxation note 27  
origination and reversal of temporary differences – continuing operations  68 54
adjustments with respect to prior years – uk and overseas – 110 
deferred tax charge 68 56 
total tax chargecredit 268 226
the tax chargecredit in the income statement is disclosed as follows  
income tax chargecredit on continuing operations  268 225
income tax credit on discontinued operations  – 01
 268 226
the tax chargecredit on continuing operations is disclosed as follows  
tax charge on profit before intangible asset amortisation and exceptional items  415 392 
tax credit on intangible asset amortisation and exceptional items  147 617
 268 225
  
tax credit on intangible asset amortisation and exceptional items is analysed as follows  
uk tax settlement note 10h – 321
tax credit on intangible asset amortisation 147 171
tax credit on exceptional item – 125
 147 617
continued   
 
 
101
financial statements 
notes to the consolidated accounts 
10 taxation continued 
c reconciliation of the total tax chargecredit 
d temporary differences associated with group investments 
no deferred tax 2010 £nil is recognised on the unremitted earnings of subsidiaries associates and joint ventures as the group 
has determined that these undistributed profits will not be distributed in the near future as a result of changes to tax legislation  
in 2009 overseas dividends received on or after 1 july 2009 are generally exempt from uk corporation tax but may be subject 
to withholding tax there are no temporary differences 2010 £nil associated with investments in subsidiaries associates and 
joint ventures for which a deferred tax liability has not been recognised but for which a tax liability may arise 
e unrecognised tax losses 
deferred income tax assets are recognised for tax loss carryforwards to the extent that the realisation of the related tax benefit 
against future taxable profits is probable uk and overseas deferred tax assets that the group has not recognised in the 
accounts amount to £403m 2010 £370m which arise in tax jurisdictions where the group does not expect to generate 
sufficient suitable future profits in addition there are capital losses of £71m 2010 £75m which have not been recognised 
recoverability of which is dependent on capital gains arising  
f deferred tax included in the income statement 
details on the balance sheet position of deferred tax are included in note 27 
g factors that may affect future tax charges 
in the june 2010 budget statement it was announced that the main rate of uk corporation tax would reduce from 28 to 27 
on 1 april 2011 the legislation was enacted in july 2010 on march 2011 the uk chancellor of the exchequer announced a 
further 1 reduction in the uk corporation tax rate to 26 effective from 1 april 2011 along with subsequent reductions of 1 
each year to a final rate of 23 from 1 april 2014 
at the balance sheet date a rate of 25 2010 27 was substantively enacted the change in rate from 27 to 25 has 
resulted in a tax credit of £04m to the income statement 
the proposed changes to reduce the uk corporation tax rate from 25 to 23 on 1 april 2014 will have a similar effect  
in future years 
 
2011  
£m 
2010 
£m 
profit from continuing operations before income tax  1294 402 
loss from discontinued operations before income tax  – 05
accounting profit before income tax  1294 397 
notional charge at uk corporation tax rate of 265 2010 280  343 111 
nondeductible goodwill impairment and intangible amortisation  05 01 
uk tax settlement note 10h  – 321
utilisation of unrecognised tax losses  12 01
effect of reduction in uk tax rates note 10g 04 01 
prior year adjustments within current and deferred tax  11 87 
spanish reinvestment relief and other tax credits 09 51
effect of overseas tax rates  57 17 
tax on spanish goodwill and intangibles  62 60
overseas financing deductions 58 64
nondeductible expenditure  19 54 
total tax chargecredit reported in the income statement note 10a  268 226
 
2011 
£m 
2010 
£m 
accelerated capital allowances  68 92
other shortterm temporary differences 36 131
utilisation of losses  36 279 
 68 56  notes to the consolidated accounts  
102
10 taxation continued 
h uk tax settlement  
during 2011 there have been no exceptional tax charges or credits 
during 2010 the group entered into discussions with hm revenue  customs hmrc to settle a number of uk corporation  
tax issues negotiations were concluded and the group agreed to a liability of £168m including interest to be paid in 
instalments this resulted in an exceptional tax release of £321m 
11 discontinued operations 
in 2011 there were no material movements arising from discontinued operations 
the 2010 cash flows from discontinued operations include an outflow of £18m in relation to north america public transit 
disposed in 2005 an outflow of £16m in relation to dot2dot disposed in 2009 and an outflow of £01m in relation to  
the group’s australian operations discontinued in 2009 
in 2010 a £03m loss from discontinued operations was recognised in relation to dot2dot and a £01m loss in relation  
to the australian operations 
12 dividends paid and proposed 
13 earnings per share 
basic earnings per share is calculated by dividing the earnings attributable to equity shareholders of £1012m 2010 £614m  
by the weighted average number of ordinary shares in issue during the year excluding those held by employee share ownership 
trusts and those held as treasury shares which are both treated as cancelled 
for diluted earnings per share the weighted average number of ordinary shares in issue during the year is adjusted to include  
the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary 
shares into ordinary shares 
the reconciliation of basic and diluted weighted average number of ordinary shares is as follows 
the normalised basic and normalised diluted earnings per share have been calculated in addition to the basic and diluted 
earnings per share required by ias 33 since in the opinion of the directors they reflect the underlying performance of the 
business’ operations more appropriately 
 
2011  
£m 
2010 
£m 
declared and paid during the year   
ordinary final dividend for 2010 paid of 600p per share  305 – 
ordinary interim dividend for 2011 of 300p per share  153 – 
 458 – 
proposed for approval not recognised as a liability at 31 december 
 
 
ordinary final dividend for 2011 65p per share 2010 60p per share  333 306 
 2011  2010 
basic earnings per share – continuing operations  199p 121p 
basic loss per share – discontinued operations  – 01p
basic earnings per share – total  199p 120p 
normalised basic earnings per share  270p 236p 
diluted earnings per share – continuing operations  198p 121p 
diluted loss per share – discontinued operations  – 01p
diluted earnings per share – total  198p 120p 
normalised diluted earnings per share  269p 235p 
 2011  2010 
basic weighted average shares  509388824 509398911 
adjustment for dilutive potential ordinary shares  1556324 2546167 
diluted weighted average shares  510945148 511945078 
continued   
 
 
103
financial statements 
notes to the consolidated accounts 
13 earnings per share continued 
the reconciliation of the earnings and earnings per share to their normalised equivalent is as follows 
14 intangible assets 
 
   2011   2010 
 £m 
basic eps 
p 
diluted eps 
p £m 
basic eps  
p 
diluted eps 
p 
profit attributable to equity shareholders  1012 199 198 614 120 120 
loss from discontinued operations  – – – 04 01 01 
profit from continuing operations       
attributable to equity shareholders  1012 199 198 618 121 121 
intangible asset amortisation  508 100 100 571 112 111 
exceptional items  – – – 612 120 120 
exceptional finance costs  – – – 20 04 04 
tax relief on goodwill and exceptional 
items including exceptional tax 147 29 29 617 121 121
normalised profit from continuing 
operations and attributable to equity 
shareholders 1373 270 269 1204 236 235 
 
customer 
contracts 
£m 
rail  
franchise  
£m 
software 
£m 
finite
 life assets 
£m 
contractual 
relationships 
£m 
goodwill  
£m 
indefinite  
life assets  
£m 
total 
£m 
cost         
at 1 january 2011  4263 99 220 4582 578 11044 11622 16204 
additions 26 – 13 39 – 04 04 43 
foreign exchange  110 – 03 113 08 219 227 340
at 31 december 
2011  4179 99 230 4508 570 10829 11399 15907 
amortisation and 
impairment         
at 1 january 2011  2334 80 93 2507 – 855 855 3362 
charge for year  466 17 25 508 – – – 508 
foreign exchange  77 – – 77 – 11 11 88
at 31 december 
2011  2723 97 118 2938 – 844 844 3782 
net book value         
at 31 december 
2011  1456 02 112 1570 570 9985 10555 12125 
at 1 january 2011  1929 19 127 2075 578 10189 10767 12842  notes to the consolidated accounts  
104
14 intangible assets continued 
indefinite life intangible assets and goodwill have been allocated to individual cashgenerating units for annual impairment testing 
on the basis of the group’s business operations the carrying value of indefinite life intangible assets by cashgenerating unit is 
as follows 
the useful economic lives of contractual relationships in north american bus and european coach  bus are deemed to be 
indefinite where historical experience has shown that these contracts are consistently renewed the customer contract and rail 
franchise intangible assets are amortised over the finite duration of the contract or franchise as appropriate all amortisation 
charges in the year have been charged to operating costs 
the recoverable amount of indefinite life intangible assets has been determined based on a value in use calculation using cash 
flow projections based on financial budgets and forecasts approved by senior management covering a five year period key 
assumptions including growth rates and operating margins are based on historical experience detailed budget plans as well  
as management’s assessment of current market and economic conditions growth has then been extrapolated forward from  
the end of the forecasts 
 
customer 
contracts 
£m 
rail franchise  
£m 
software 
£m 
finite
 life assets 
£m 
contractual 
relationships 
£m 
goodwill  
£m 
indefinite  
life assets  
£m 
total 
£m 
cost         
at 1 january 2010 4340 99 186 4625 558 11164 11722 16347 
disposals 47 – – 47 – 09 09 56 
additions internally 
generated  – – 20 20 – – – 20 
foreign exchange  124 – 14 110 20 129 109 219
at 31 december 2010 4263 99 220 4582 578 11044 11622 16204 
amortisation and 
impairment         
at 1 january 2010 1910 57 13 1980 – 868 868 2848 
charge for year  470 24 77 571 – – – 571 
foreign exchange  46 01 03 44 – 13 13 57
at 31 december 2010 2334 80 93 2507 – 855 855 3362 
net book value         
at 31 december 2010 1929 19 127 2075 578 10189 10767 12842 
at 1 january 2010 2430 42 173 2645 558 10296 10854 13499 
 
2011 
contractual 
relationships 
£m 
2011
goodwill 
£m 
total 
£m 
2010  
contractual 
relationships  
£m 
2010 
goodwill  
£m 
total 
£m 
uk coach – 132 132 – 132 132 
north american bus  397 2761 3158 400 2764 3164 
european coach  bus  173 7092 7265 178 7293 7471 
 570 9985 10555 578 10189 10767 
continued   
 
 
105
financial statements 
notes to the consolidated accounts 
14 intangible assets continued 
the assumptions used for the cashgenerating units are as follows 
the calculation of value in use for each cashgenerating unit is most sensitive to the assumptions over operating profit margin 
discount rates and revenue growth rates 
the value in use of the north american bus division exceeds its carrying amount by £315m 2010 £324m sensitivity analysis 
has been completed on each key assumption in isolation and this indicates that the value in use of the division will be equal to  
its carrying amount following a reduction in operating profit margin of 50 basis points 2010 50 basis points an increase in the 
discount rate of 30 basis points 2010 30 basis points or a reduction in revenue growth rates of 100 basis points 2010 110 
basis points the continued nonimpairment of north america is dependent upon continuing to deliver the margin recovery in 
future years 
the value in use of the european coach  bus division exceeds its carrying amount by £1768m 2010 £2523m sensitivity 
analysis has been completed on each key assumption in isolation and this indicates that the value in use of the division will be 
equal to its carrying amount following a reduction in operating profit margin of 260 basis points 2010 380 basis points an 
increase in the discount rate of 90 basis points 2010 130 basis points or a reduction in revenue growth rates of 410 basis 
points 2010 620 basis points the decrease in headroom and increased sensitivity reflects the spanish macroeconomic  
risks which have been incorporated into the future cash flow assumptions see principal risk and uncertainties section for  
further details regarding how group management recognises prioritises and puts in place measures to mitigate these risks 
it is believed that any reasonably possible movement on assumptions will not lead to an impairment of goodwill allocated  
to uk coach 
the directors consider the assumptions used to be consistent with the historical performance of each cashgenerating unit  
and to be realistically achievable in light of economic and industry measures and forecasts 
15 property plant and equipment 
 
 
pre tax discount 
 rate applied to  
cash flow projections 
growth rate used to 
extrapolate cash flows 
beyond five year period of 
management plan 
 2011  2010  2011  2010 
uk coach  98 99 20 20 
north american bus  113 111 20 20 
european coach  bus  90 84 20 20 
 
freehold land 
and buildings 
£m 
long leasehold 
property 
improvements 
£m 
public service 
vehicles  
£m 
plant and 
equipment 
fixtures  
and fittings  
£m 
total 
£m 
cost 
     
at 1 january 2011  952 37 9068 1657 11714 
additions  19 05 1397 147 1568 
acquisitions of businesses – – 15 – 15 
disposals  – – 152 54 206
foreign exchange  20 – 73 14 107
at 31 december 2011  951 42 10255 1736 12984 
depreciation      
at 1 january 2011  112 16 3279 1166 4573 
charge for the year  19 05 867 164 1055 
disposals – – 107 47 154
foreign exchange  01 01 26 07 35
at 31 december 2011  130 20 4013 1276 5439 
net book value      
at 31 december 2011  821 22 6242 460 7545 
at 1 january 2011  840 21 5789 491 7141  notes to the consolidated accounts  
106
15 property plant and equipment continued 
property plant and equipment held under finance lease agreements are analysed as follows 
finance leased assets and assets under hire purchase contracts are pledged as security for the related finance lease and hire 
purchase liabilities 
 
freehold land 
and buildings 
£m 
long leasehold 
property 
improvements 
£m 
public service 
vehicles  
£m 
plant and 
equipment 
fixtures  
and fittings  
£m 
total 
£m 
cost      
at 1 january 2010  955 44 8169  1586  10754 
additions  32 06 1318 152 1508 
acquisitions of businesses – – 24 – 24 
disposals  14 15 564 86 679
foreign exchange  21 02 121 05 107 
at 31 december 2010 952 37 9068 1657 11714 
depreciation      
at 1 january 2010 110 25 2866 1027 4028 
charge for the year  18 05 795 180 998 
disposals 16 15 456 42 529
foreign exchange  – 01 74 01 76 
at 31 december 2010 112 16 3279 1166 4573 
net book value      
at 31 december 2010 840 21 5789 491 7141 
at 1 january 2010 845 19 5303 559 6726 
  
2011  
£m 
2010 
£m 
land and buildings  – cost  14 15 
 – depreciation  01 01
net land and buildings   13 14 
public service vehicles  – cost  2456 2151 
 – depreciation 615 540
net public service vehicles   1841 1611 
plant and equipment  – cost  09 13 
 – depreciation  08 12
net plant and equipment   01 01 
total net book value   1855 1626 
continued   
 
 
107
financial statements 
notes to the consolidated accounts 
16 subsidiaries 
the companies listed below include all those which principally affect the result and net assets of the group a full list of 
subsidiaries joint ventures and associates will be annexed to the next annual return to companies house the principal  
country of operation in respect of the companies below is the country in which they are incorporated 
national express group plc is the beneficial owner of all the equity share capital either itself or through subsidiaries of the 
companies the group’s train passenger services in the uk are operated through franchises awarded by dft rail as delegated 
by the uk government 
incorporated in england and wales  
national express limited  administration and marketing of express coach services in great britain 
eurolines uk limited  administration and marketing of express coach services to europe 
airlinks airport services limited  operation of coach services 
national express rail replacement limited  operation of coach services 
the kings ferry limited operation of coach services 
west midlands travel limited  operation of bus services 
c2c rail limited  operation of train passenger services 
london eastern railway limited trading  
as national express east anglia operation of train passenger services ceased operating on 4 february 2012 
 
incorporated in scotland  
tayside public transport co limited trading as travel dundee operation of bus services 
 
incorporated in the usa  
durham school services lp  operation of school bus services 
 
incorporated in canada  
stock transportation limited  operation of school bus services 
 
 the main holding companies of the alsa group 
incorporated in spain  
nex continental holdings sl holding company for operating companies 
tury express sa  holding company for operating companies 
general tecnica industrial slu  holding company for operating companies  notes to the consolidated accounts  
108
17 derivative financial assets and available for sale investments 
further information on the group’s use of fuel interest rate and foreign exchange derivatives is included in note 31 
available for sale investments 
the principal available for sale investments are as follows 
 
2011  
£m 
2010 
£m 
available for sale investments – unlisted ordinary shares  76 78 
derivative financial instruments – interest rate derivatives 237 – 
derivative financial instruments – fuel derivatives 73 72 
derivative financial instruments included in noncurrent assets  310 72 
derivative financial instruments – interest rate derivatives  – 38 
derivative financial instruments – fuel derivatives  131 141 
derivative financial instruments – foreign exchange derivatives 80 04 
derivative financial instruments included in current assets  211 183 
 
2011 
 £m 
2010
 £m 
cost or valuation and net book value   
at 1 january  78 77 
additions – 03 
foreign exchange 02 02
at 31 december  76 78 
   2011 2010 
name  country of registration class of share 
proportion 
held  
 
proportion 
held 
 
bosnjak holdings pty ltd australia ordinary shares 86 86 
prepayment cards limited pcl england and wales ordinary shares – 235 
metros ligeros de madrid sa mlm  spain ordinary shares  15 15 
various investments within alsa and continental auto  spain ordinary shares  116 116 
continued   
 
 
109
financial statements 
notes to the consolidated accounts 
18 investments accounted for using the equity method 
investments accounted for using the equity method are as follows 
the group’s share of post tax results from associates and joint ventures accounted for using the equity method is as follows 
a investments in joint ventures 
the group’s interests in joint ventures are as follows 
the financial information of this joint venture is summarised below 
the carrying amount of the investment in joint ventures matches the group’s share of the net assets 
 
2011  
£m 
2010 
£m 
joint ventures  20 20 
associates  46 46 
total investments accounted for under the equity method  66 66 
 
2011  
£m 
2010 
£m 
share of joint venture’s profit 01 01
share of associates’ profit 13 02
total share of results from associates and joint ventures 14 03
name  country of registration activity 
proportion held 
 
iberoeurosur sl  spain holding company of deutsche touring  20 
  ibero 
share of joint venture’s balance sheet and results 
2011  
£m 
2010 
£m 
noncurrent assets  35 37 
current assets  – 01 
share of gross assets 35 38 
noncurrent liabilities  12 15
current liabilities  03 03
share of gross liabilities  15 18
share of net assets  20 20 
revenue 01 01 
share of profit 01 01  notes to the consolidated accounts  
110
18 investments accounted for using the equity method continued 
b investments in associates 
the group’s interests in associates are as follows 
name   country of registration  
proportion held 
 
intercapital and regional rail limited  england and wales  40 
european coach  bus associates  spain  2050 
intercapital and regional rail limited icrrl was contracted to manage the operations of eurostar uk until 2010 in 2006 and 
2009 onerous contract provisions were recognised in relation to the group’s obligation to fund the losses of icrrl as a result 
the group ceased to recognise the share of results of icrrl  
european coach  bus’s associates are generally involved in the operation of coach and bus services management of bus 
stations and similar operations 
the aggregate amounts related to associates are summarised below 
 
   
share of associates’ balance sheets and results 
2011  
£m 
2010 
£m 
noncurrent assets  47 51 
current assets  59 61 
share of gross assets  106 112 
noncurrent liabilities  24 24
current liabilities  36 42
share of gross liabilities  60 66
share of net assets  46 46 
total revenue 156 155 
share of profit 13 02 
continued   
 
 
111
financial statements 
notes to the consolidated accounts 
19 business combinations 
a acquisitions 
2011 acquisitions 
during the year the group paid £04m to acquire a controlling interest in dainco sa a company that operates coach services  
in spain goodwill arising on the acquisition was £04m included in the acquired balance sheet was £10m of bank borrowings 
2010 acquisitions 
on 31 december 2010 in the united states the group acquired the entire share capital of school bus operator vogel vogel 
bus company inc details of the acquisition are disclosed in the 2010 annual report and accounts in 2011 £66m of deferred 
consideration was paid in relation to the acquisition 
b disposals 
there were no business disposals in the group in 2011 or 2010 
during 2011 £09m of deferred consideration was received in relation to the group’s portuguese transport business that was 
disposed of in 2008 
20 noncurrent assets – other receivables 
21 inventories 
the movement on the provision for slow moving and obsolete inventory is immaterial 
22 current assets – trade and other receivables 
an analysis of the provision for impairment of receivables is provided below 
 
 
2011  
£m 
2010 
£m 
trade receivables 47 47 
prepayments and accrued income  – 01 
other receivables 12 12 
 59 60 
 
2011  
£m 
2010 
£m 
raw materials and consumables  188 176 
 
2011  
£m 
2010 
£m 
trade receivables  1558 1503 
less provision for impairment of receivables  102 143
trade receivables – net  1456 1360 
amounts due from associates and joint ventures note 36 10 08 
amounts owed by other related parties note 36 10 13 
other receivables  472 305 
prepayments and accrued income  533 582 
 2481 2268 
 
2011  
£m 
2010 
£m 
at 1 january  143 121
utilisedprovided in the year  41 22
at 31 december 102 143 notes to the consolidated accounts  
112
23 cash and cash equivalents 
 
2011  
£m 
2010 
£m 
cash at bank and in hand  648 815 
overnight deposits  250 368 
other shortterm deposits  27 105 
cash and cash equivalents  925 1288 
cash and cash equivalents include restricted balances of £140m 2010 £217m held by the uk rail subsidiaries tocs under 
the terms of the train franchise agreements cash can only be distributed by the tocs either up to the value of retained profits or 
the amount determined by prescribed liquidity ratios the restricted cash represents the balance that is either not available for 
distribution or the amount required to satisfy the liquidity ratio at the balance sheet date 
cash at bank and in hand earns interest at floating rates based on daily bank deposit rates shortterm deposits are made for 
varying periods of between one day and three months depending on the immediate cash requirements of the group and earn 
interest at the agreed shortterm floating deposit rate the fair value of cash and cash equivalents is equal to the carrying value 
24 current liabilities – trade and other payables 
trade payables are noninterest bearing and are normally settled on 30 day terms and other payables are noninterest bearing 
and have an average term of two months included within other payables are deferred fixed asset grants from government or 
other public bodies of £26m 2010 £23m 
accrued interest on bonds of £304m was presented in other payables in the 2010 financial accounts in 2011 this has been 
included within bonds – accrued interest shown in note 28 
 
2011 
£m 
2010 
£m 
trade payables  1686 1753 
amounts owed to associates and joint ventures note 36 10 11 
amounts owed to other related parties note 36 07 07 
other tax and social security payable  172 360 
accruals and deferred income  1828 1711 
other payables  961 864 
 4664 4706 
continued   
 
 
113
financial statements 
notes to the consolidated accounts 
25 other noncurrent liabilities 
26 provisions 
1
 the insurance claims provision arises from estimated exposures at the year end the majority of which will be utilised in the next five years and 
comprises provisions for existing claims arising in the uk and north america 
2
 a provision was recognised in 2006 for the group’s onerous contract for eurostar with icrrl £90m 2010 £87m was paid to icrrl during  
the year the remainder has been settled in 2012 
3
 other includes amounts provided for onerous property contracts liabilities for future franchise exits within the uk rail division costs arising from 
restructuring activities and £46m of expected liabilities for a working time claim in north america these amounts are expected to be settled during 
2012 other noncurrent amounts are expected to be settled in 2013  
when the effect is material the provisions are discounted to their net present value 
27 deferred tax 
based on current capital investment plans the group expects to be able to claim capital allowances in excess of depreciation  
in future years at a similar level to the current year 
deferred tax assets and liabilities within the same jurisdiction have been offset 
 
2011 
£m 
2010 
£m 
deferred fixed asset grants 37 37 
other liabilities 12 215 
 49 252 
 
insurance 
claims
1
 £m 
eurostar
 onerous  
contract  
provision
2
 
 £m 
other
3
 
£m 
total 
£m 
at 1 january 2011  458 182 156 796 
chargedreleased to the income statement  206 02 48 252 
utilised in the year  240 90 87 417
amortisation of discount  17 – – 17 
exchange difference  01 – – 01 
at 31 december 2011  442 90 117 649 
current 31 december 2011  214 90 105 409 
noncurrent 31 december 2011  228 – 12 240 
 442 90 117 649 
current 31 december 2010  261 90 88 439 
noncurrent 31 december 2010  197 92 68 357 
 458 182 156 796 
 
2011  
£m 
2010 
£m 
net deferred tax liability at 1 january 841 638
debit to income statement  68 56
charge to other comprehensive income or equity 42 161
exchange differences  14 14 
transfers from corporation tax 15 – 
net deferred tax liability at 31 december 952 841 notes to the consolidated accounts  
114
27 deferred tax continued 
deferred tax assets 
2011  
£m 
2010 
£m 
accelerated tax depreciation – 10
losses carried forward  – 12 
other shortterm temporary differences  – 26 
total  – 28 
 
28 borrowings and derivative financial liabilities 
an analysis of interestbearing loans and borrowings is provided in note 29 further information on derivative financial instruments 
is provided in note 31 
accrued interest of £304m was presented in other payables in the 2010 financial accounts in 2011 this has been included 
within bonds – accrued interest 
deferred tax liabilities 
2011  
£m 
2010 
£m 
accelerated tax depreciation  1517 944
losses carried forward  301 373 
other shortterm temporary differences 264 298
total 952 869
 
2011  
£m 
2010 
£m 
noncurrent 
 
 
bank loans  55 36 
bonds 5834 5656 
finance lease obligations 1292 1038 
other debt payable  03 14 
noncurrent borrowings  7184 6744 
fuel derivatives  24 – 
interest rate derivatives  – 51 
noncurrent derivative financial instruments  24 51 
noncurrent borrowing and derivative financial liabilities  7208 6795 
current   
bank loans  24 362 
bonds – accrued interest 299 304 
finance lease obligations  221 278 
other debt payable  04 04 
current borrowings  548 948 
fuel derivatives – 20 
foreign exchange derivatives  02 104 
current derivative financial instruments  02 124 
current borrowings and derivative financial liabilities  550 1072 
continued   
 
 
115
financial statements 
notes to the consolidated accounts 
29 interestbearing borrowings 
the effective interest rates on loans and borrowings at the balance sheet date were as follows 
1
 this date is the ultimate maturity date of the syndicated credit facility 
during 2010 two new sterling bonds with nominal values of £350m and £225m were issued under the £1bn emtn following 
the issuance of the £350m bond in january 2010 the group repaid its €270m euro bank loan the group used the proceeds of 
the £225m bond to repay a portion of its £800m syndicated credit facility maturity 5 june 2011 this facility was subsequently 
refinanced on 21 july 2010 and replaced with a £500m syndicated credit facility maturity 31 august 2014  
under the terms of the £1bn emtn programme there is a change in control put option such that upon a change of control 
event any holder of any mtn may require the company to redeem or purchase that mtn 
details of the group’s interest rate risk management strategy and associated interest rate derivatives are included in notes  
30 and 31 
the group is subject to a number of financial covenants in relation to its syndicated credit facilities which if contravened  
could result in its borrowings under the facility becoming immediately repayable these covenants specify maximum net debt  
to ebitda and minimum ebitda to net interest payable 
 
2011 
£m maturity 
effective
 interest rate 
2010 
£m maturity  
effective 
interest rate 
7 year sterling bond 3516 january 2017 654 3450 january 2017 654 
10 year sterling bond 2318 june 2020 685 2206 june 2020 685 
bonds 5834   5656   
bonds – accrued interest  299   304   
sterling bank loans  – august 2014
1
libor  125 353 august 2014
1
 libor  145 
european bank loans  63 20122016 495 30 20112015 300 
european bank loans 16 20122016 474 15 20112015 264 
bank loans  79   398 
  
us dollar finance leases 
at fixed rate  1173 20122018 267 909 20112017 370 
european finance leases  
at fixed rate 81 20122017 609 84 20112015 65 
european finance leases  
at floating rate  58 20122017 euribor  107 88 20112016 euribor  062 
sterling finance leases  
at fixed rate  201 20122018 476 235 20112018 476 
finance leases  1513   1316 
  
euro loans  07 20122014 – 18 20112016 – 
other debt payable  07   18 
  
total  7732   7692 
   notes to the consolidated accounts  
116
29 interestbearing borrowings continued 
the following table sets out the carrying amount by maturity of the group’s interest bearing borrowings 
as at 31 december 2011 
 1 year  
£m 
12 years 
£m 
23 years 
£m 
34 years 
£m 
45 years  
£m 
 5 years  
£m 
total 
£m 
fixed rate 
       
bank loans 15 14 15 13 06 – 63
bonds – – – – – 6133 6133
finance leases  203 218 348 149 127 410 1455
other debt payable 04 02 01 – – – 07
floating rate    
cash assets  925 – – – – – 925 
bank loans  09 03 03 01 – – 16
finance leases 18 12 10 11 05 02 58
 
30 financial risk management objectives and policies 
financial risk factors and management 
the group’s multinational operations and debt levels expose it to a variety of financial risks of which the most material are 
market risks relating to fuel prices foreign currency exchange rates interest rates and the availability of funding at reasonable 
margins the group has in place a risk management programme that seeks to manage the impact of these risks on the financial 
performance of the group by using financial instruments including borrowings committed facilities and forward foreign 
exchange fuel and interest rate derivatives 
the board of directors has delegated the responsibility for implementing the financial risk management policies laid down by the 
board to the group finance director and group treasurer the policies are implemented by the group treasury department with 
regular reporting to the group finance director on its activities 
as at 31 december 2010 
 1 year  
£m 
12 years 
£m 
23 years 
£m 
34 years 
£m 
45 years  
£m 
 5 years  
£m 
total 
£m 
fixed rate        
bonds  – –––– 5960 5960
finance leases 229 138 156 238 127 340 1228
other debt payable 04 – 12 – – 02 18
floating rate    
cash assets  1288 – – – – – 1288 
bank loans  361 08 16 07 06 –  398
finance leases  49 14 08 07 08 02 88
continued   
 
 
117
financial statements 
notes to the consolidated accounts 
30 financial risk management objectives and policies continued 
foreign currency 
the group has major foreign operations in the us canada and spain and as a result is exposed to the movements in foreign 
currency exchange rates on the translation of these foreign currency denominated net assets and earnings these movements 
can have a significant impact on the group’s reported results the group seeks to manage this foreign currency exchange 
movements risk by aligning its foreign currency denominated liabilities with the ebit generated in each currency such that  
some protection is afforded to the net debt ebitda covenant within the group’s core borrowing facility this is achieved by  
a combination of foreign currency borrowings and finance leases and entering into derivative financial instruments such as  
cross currency interest rate swaps and foreign exchange swaps at the year end the group had outstanding foreign exchange 
derivatives of €2500m and us1950m swaps of us490m €60m c70m and finance leases of us1823m and €166m 
derivative financial instruments are designated as net investment hedges of foreign currency assets the effective portion  
of the gain or loss on the hedge is recognised in the statement of comprehensive income and recycled to the income  
statement at the same time as the underlying hedged net assets affect the income statement any ineffectiveness is taken  
to the income statement 
the table below demonstrates the sensitivity of the group’s financial instruments to a reasonably possible change in foreign 
exchange rates with all other variables held constant this would affect the group’s profit before tax and translation reserve  
the effect on the translation reserve represents the movement in the translated value of the foreign currency denominated loans 
and change in fair value of crosscurrency swap contracts these movements would be offset by an opposite movement in the 
translated value of the group’s overseas net investments it is estimated that a 10 change in the corresponding exchange  
rates would result in an exchange gain or loss in the translation reserve of £172m 
interest rate risk 
the group is exposed to movements in interest rates on both interestbearing assets and liabilities it is the group’s policy  
to maintain an appropriate balance between fixed and floating interest rates on borrowings in order to provide a level of certainty 
to interest expense in the short term and to reduce the year on year impact of interest rate fluctuations over the medium term  
to achieve the desired fixedfloating ratio the group has entered into a series of interest rate swaps that have the effect of 
converting fixed rate debt to floating rate debt the net effect of these transactions was that as at 31 december 2011 the 
proportion of group net debt at floating rates was 16 2010 19  
the table below demonstrates the sensitivity of the group’s financial instruments to a reasonably possible change in interest 
rates with all other variables held constant on the group’s profit before tax and on the group’s hedging reserve  
the sensitivity analysis covers all floating rate financial instruments including the interest rate swaps if the interest rates 
applicable to floating rate instruments denominated in sterling were increased by 100bps it is estimated that the group’s  
profit before taxation would decrease by approximately £13m the group does not hold significant floating rate instruments 
denominated in us or in euro and it is therefore estimated that the group’s profit before tax would change by less than £01m 
should the interest rates applicable to floating rate instruments denominated in us increase by 50bps or should the interest 
rates applicable to floating rate instruments denominated in euro increase by 75bps the analysis assumes that the amount  
and mix of floating rate debt including finance leases remains unchanged from that in place at 31 december 2011 
   2011   2010 
as at 31 december 
strengthening
weakening
 in currency 
effect 
on profit
 before tax 
£m 
effect on 
translation  
reserve  
£m 
effect  
on profit  
before tax  
£m 
effect on 
translation 
reserve 
£m 
us dollar  10 – 15 – 155
euro  10 – 196 – 217
canadian dollar  10 – 09 – 01
us dollar 10 – 15 – 155 
euro  10 – 196 – 217 
canadian dollar  10 – 09 – 01  notes to the consolidated accounts  
118
30 financial risk management objectives and policies continued 
commodity prices 
the group is exposed to movements in commodity prices as a result of its fuel usage it is the group’s policy to hedge this 
exposure in order to provide a level of certainty as to its cost in the short term and to reduce the year on year impact of price 
fluctuations over the medium term this is achieved by entering into fuel derivatives at 31 december 2011 the group had 
hedged approximately 100 of its 2012 expected usage and 50 of its expected usage in 2013 see the financial review  
for further details  
the table below demonstrates the effect of a reasonably possible variation in fuel prices with all other variables held constant  
on the fair value of the group’s financial instruments and accordingly on the group’s profit before tax and on the group’s 
hedging reserve 
the sensitivity analysis includes all fuel derivatives the effect on the hedging reserve arises through movements on the fair value 
of the group’s fuel derivatives for these derivative contracts the sensitivity of the net fair value to an immediate 20 increase or 
decrease in all prices would have been £371m at 31 december 2011 the figure does not include any corresponding economic 
advantage or disadvantage that would arise from the natural business exposure which would be expected to offset the gain or 
loss on the derivatives 
credit risk 
the maximum credit risk exposure of the group is the gross carrying value of each of its financial assets this risk is mitigated  
by a number of factors many of the group’s principal customers suppliers and financial institutions with which it conducts 
business are public or quasipublic bodies both national dft rail and network rail in the uk and local school boards in  
north america municipal authorities in spain and morocco transport for london and centro in the uk the group does  
not consider these counterparties to pose a significant credit risk outside of this the group does not consider it has significant 
concentrations of credit risk the group has implemented policies that require appropriate credit checks on potential customers 
before sales commence 
the only elements of the group’s financial assets which are not impaired but are past due are certain trade receivable items  
an ageing of the assets which are past due is included in the table below in terms of trade receivables that are neither impaired 
nor past due there are no indications as at the yearend reporting date that the debtors will not meet their payment obligations 
see principal risks and uncertainties section for details of how management manages this process 
   2011  2010 
as at 31 december 
increase
decrease 
in basis
points 
effect on 
profit 
before tax
 £m 
effect on 
hedging  
reserve 
 £m 
effect on  
profit  
before tax 
 £m 
effect on 
hedging 
reserve 
£m 
sterling  100 13 – 18 – 
us dollar 50 – – 01 – 
euro  75 – – 02 – 
sterling  100 13 – 18 – 
us dollar  50 – – 01 – 
euro  75 – – 02 – 
   2011  2010 
as at 31 december 
increase
decrease
 in price 
effect on 
profit 
before tax 
£m 
effect on  
hedging  
reserve  
£m 
effect on  
profit  
before tax  
£m 
effect on 
hedging 
reserve 
£m 
sterling denominated ulsd  20 – 116 – 135 
us dollar denominated heating oildiesel  20 – 121 – 116 
euro denominated ulsd  20 – 134 – 122 
sterling denominated ulsd  20 – 116 – 135
us dollar denominated heating oildiesel  20 – 121 – 116
euro denominated ulsd  20 – 134 – 122
continued   
 
 
119
financial statements 
notes to the consolidated accounts 
30 financial risk management objectives and policies continued 
liquidity risk 
the group’s liquidity risk is managed centrally by the group treasury department with operating units forecasting their cash 
requirements the group actively maintains a mixture of longterm and mediumterm committed facilities that are designed  
to ensure the group has sufficient available funds to meet current and forecast funding requirements in managing the liquidity 
risk the group has access to a range of funding sources through the banking and capital markets  
at 31 december 2011 the group had committed bank borrowing and finance lease facilities of £6205m 2010 £6316m  
the group has a £500m committed unsecured revolving bank facility maturing in august 2014 which was undrawn at 
31 december 2011 2010 £460m letters of credit issued to support insurance retentions were £308m 2010 £394m  
the table below summarises the maturity profile of the group’s financial liabilities at 31 december 2011 based on the contractual 
undiscounted cash flows including interest cash flows as such the amounts in this table will not agree to the carrying amounts 
disclosed in the balance sheet or other notes the table includes cash flows associated with derivative hedging instruments 
their amounts reflect the maturity profile of the fair value liability where the instrument will be settled net and the gross settlement 
amount where the pay leg of a derivative will be settled separately to the receive leg 
year ended 31 december 2011 
on demand 
£m 
less than 1 
year 
£m 
15 years  
£m 
 5 years  
£m 
total 
£m 
bank loans  – 24 55 – 79 
bonds – 368 1471 6565 8404 
finance lease obligations  – 312 929 450 1691 
other debt payable – 04 01 02 07 
trade and other payables  – 4638 12 – 4650 
icrrl onerous contract obligation  – 90 – – 90 
 – 5436 2468 7017 14921 
foreign exchange derivatives – 80 – – 80
interest rate derivatives – 40 123 85 248
fuel derivatives – 165 57 – 222
 – 285 180 85 550
 
   of which not impaired and past due in the following periods 
 
carrying 
amount 
£m 
of which 
neither 
impaired 
nor past due 
£m 
less than 
30 days 
£m 
between  
30 and 60 
days  
£m 
between  
61 and 90 
days 
 £m 
over 90 days
 £m 
trade receivables at 31 december 2011 1503 908 265 102 48 180 
trade receivables at 31 december 2010  1407 1047 128 44 40 148 
year ended 31 december 2010 
on demand 
£m 
less than 1 
year 
£m 
15 years  
£m 
 5 years  
£m 
total 
£m 
bank loans  – 16 477 – 493
bonds – 368 1471 6933 8772
finance lease obligations  – 283 831 385 1499
other debt payable – 04 12 02 18
interest rate derivatives – – – 12 12
fuel derivatives – 37 64 – 101
foreign exchange derivatives  – 104 – – 104
trade and other payables  – 3907 215 – 4122
icrrl onerous contract obligation  – 90 92 – 182
 – 4809 3162 7332 15303 notes to the consolidated accounts  
120
30 financial risk management objectives and policies continued 
capital risk management 
the group seeks to adopt efficient financing structures that enable it to use its balance sheet strength to achieve the group’s 
objectives without putting shareholder value at risk the group’s capital structure comprises its equity refer to the group 
statement of changes in equity and its net debt refer to note 37  
the increase in the group’s net debt from £6104m to £6337m excluding accrued interest is explained in the financial review 
information about the financial covenants in relation to the group’s borrowing facilities is included in note 29  
31 financial instruments including cash trade receivables and payables 
fair values 
the table below illustrates the fair values of all financial assets and liabilities held by the group at 31 december 2011 
loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active 
market they are measured at amortised cost using the effective interest rate method and the carrying value in all cases 
approximates to the fair value  
available for sale investments are non derivative assets that are either designated as available for sale or are not classified as 
loans and receivables or held to maturity investments the group’s available for sale investments have no active market and in 
the absence of any other reliable external information are carried at cost or amortised cost which approximates to the fair value 
the fair value of derivatives is either determined by the thirdparty financial institution with which the group holds the instrument 
in line with the market value of similar financial instruments or by use of valuation techniques using market data derivatives other 
than those designated as effective hedging instruments are classified as fair value through profit or loss and are carried on the 
balance sheet at their fair value with gains or losses recognised in the income statement derivatives designated as hedging 
instruments in an effective hedge are carried on the balance sheet at their fair value for cash flow hedges and hedges of net 
investments in foreign operations the effective portion of the gain or loss on the hedging instrument is recognised directly in 
other comprehensive income while the ineffective portion is recognised in the income statement amounts taken to other 
comprehensive income are transferred to the income statement when the hedged transaction affects profit or loss or when the 
foreign operation is sold or partially disposed for fair value hedges all gains or losses are recognised in the income statement 
derivatives are the only instrument which the group holds at fair value the fair value measurement of these instruments is 
categorised within the level 2 ie the fair values are derived based on observable market inputs in accordance with ifrs 7 
the group’s bonds are held at a hybrid amortised cost with a fair value adjustment after initial recognition at fair value the 
bonds are measured at amortised cost using the effective interest rate method a portion of the bonds are designated as the 
hedged item in an effective fair value hedging relationship as such the carrying value of this portion is adjusted for changes in  
fair value attributable to the risk being hedged this net carrying value will differ to the fair value depending on movements in the 
group’s credit risk movements in interest rates on the unhedged portion and unamortised fees 
all other liabilities including finance leases banks loans trade and other payables and other debt payable are held at amortised 
cost after initial fair value recognition these instruments are measured at amortised cost using the effective interest rate method 
the carrying value of these liabilities approximates to the fair value 
continued   
 
 
121
financial statements 
notes to the consolidated accounts 
31 financial instruments including cash trade receivables and payables continued 
 
other receivables and other payables are to be settled in cash in the currency they are held in 
in accordance with ias 39 ‘financial instruments recognition and measurement’ the group has reviewed all contracts  
for embedded derivatives that are required to be separately accounted for no embedded derivatives have been identified 
classification of financial instruments  
as at 31 december 2011 
loans and 
receivables 
£m 
available
forsale 
assets 
£m 
derivatives 
used for 
hedging 
£m 
liabilities 
measured at 
amortised 
cost  
£m 
at fair value 
through  
profit or loss  
£m 
total 
£m 
assets 
      
investments  – 76 – – – 76 
fuel derivatives  – – 204 – – 204 
foreign exchange derivatives – – 80 – – 80 
interest rate derivatives – – 237 – – 237 
cash and cash equivalents  925 – – – – 925 
trade and other receivables  2007 – – – – 2007 
 2932 76 521 – – 3529 
liabilities       
bank loans  – – – 79 – 79
bonds including accrued interest – – – 6133 – 6133
finance lease obligations  – – – 1513 – 1513
other debt payable  – – – 07 – 07
fuel derivatives – – 24 – – 24
foreign exchange derivatives – – 02 – – 02
trade and other payables  – – – 4650 – 4650
icrrl onerous contract obligation  – – – 90 – 90
 – – 26 12472 – 12498
classification of financial instruments  
as at 31 december 2010 
loans and 
receivables 
£m 
available
forsale 
assets 
£m 
derivatives 
used for 
hedging 
£m 
liabilities 
measured at 
amortised cost  
£m 
at fair value 
through  
profit or loss  
£m 
total 
£m 
assets       
investments  – 78 – – – 78 
fuel derivatives  – – 213 – – 213 
foreign exchange derivatives – – 04 – – 04 
interest rate derivatives – – 38 – – 38 
cash and cash equivalents  1288 – – – – 1288 
trade and other receivables  2328 – – – – 2328 
 3616 78 255 – – 3949 
liabilities       
bank loans  – – – 398 – 398
bonds including accrued interest – – – 5960 – 5960
finance lease obligations  – – – 1316 – 1316
other debt payable  – – – 18 – 18
interest rate derivatives – – 51 – – 51
fuel derivatives – – 20 – – 20
foreign exchange derivatives – – 104 – – 104
trade and other payables  – – – 5262 – 5262
icrrl onerous contract obligation  – – – 182 – 182
 – – 17513136 – 13311 notes to the consolidated accounts  
122
31 financial instruments including cash trade receivables and payables continued 
the group assesses at each yearend reporting date whether a financial asset or group of financial assets is impaired in the 
financial year 2011 there was no objective evidence that would have necessitated the impairment of loans and receivables  
or availableforsale assets except the provision for impairment of receivables see note 22 
hedging activities 
the group uses derivative financial instruments to manage exposures to market risk such as movements in foreign exchange 
rates fuel prices and interest rates such derivative financial instruments are initially recognised at fair value and are subsequently 
remeasured at fair value in line with ias 39 the group classifies hedges as a fair value hedges used to hedge exposure to 
changes in the fair value of a recognised asset or liability b cash flow hedges used to hedge exposure to variability in cash flows 
associated with a recognised asset or liability or a highly probable forecast transaction and c hedges of a net investment in a 
foreign operation  
in 2011 the group applied cash flow hedge accounting for hedging floating fuel price risks in highly probable forecast purchase 
transactions and for hedging net investments in us and euro foreign operations the group applied fair value hedge accounting 
for the fair value interest rate risk on £200m of the group’s fixed rate bonds  
the movement on derivative financial instruments is detailed below 
 
the movement on the hedging reserve is detailed below 
 
interest rate 
swaps
 £m 
foreign  
exchange 
forward  
contracts  
£m 
fuel swaps  
£m 
total 
£m 
net liabilityasset at 1 january 2011 13 100 193 80 
transfers to the income statement on cash flow hedges – – 253 253
cash settlementsaccrual 75 128 – 203 
revaluation through income statement  175 – – 175 
revaluation through other comprehensive income – – 242 242 
exchange differences – 50 02 48 
net asset at 31 december 2011  237 78 180 495 
 
interest rate 
swaps
 £m 
foreign  
exchange 
 forward  
contracts  
£m 
fuel swaps  
£m 
total 
£m 
net liability at 1 january 2010 242 74 64 380
cash settlements  224 20 24 268 
revaluation through income statement  04 – 02 06 
revaluation through other comprehensive income – – 211 211 
exchange differences 01 46 20 25
net liability at 31 december 2010 13 100 193 80 
 
2011  
£m 
2010 
£m 
at 1 january  176 08 
transferred to income statement – operating costs 253 23 
revaluation through over comprehensive income 242 211 
tax on revaluation 06 60
tax on transfers to income statement – 06
at 31 december  159 176 
continued   
 
 
123
financial statements 
notes to the consolidated accounts 
31 financial instruments including cash trade receivables and payables continued 
hedge of net investments in foreign entities 
the group uses foreign currency borrowings and derivative financial instruments to hedge the net investment in material foreign 
currency net assets of the group and are used to reduce the exposure to foreign exchange rate movements at 31 december 
2011 the group had designated a total of €2500m of synthetic debt in the form of foreign exchange derivatives as a net 
investment hedge of €2500m of the net assets of the spanish subsidiary no ineffectiveness was recognised in relation to this 
hedge the foreign exchange derivatives have a maturity date of 24 january 2012 and will be rolled forward as appropriate to 
maintain a desirable level of hedging following the groups’ announcement of its intention to acquire petermann partners inc  
the group has entered into a 200m foreign exchange forward as a cash flow hedge for this forecast transaction the portion  
of the gain or loss on the hedging instruments that is determined to be an effective hedge is recognised directly in translation 
reserves and to this extent offsets any gains or losses on translation of the net investments in the subsidiaries 
fuel derivatives 
the group has a number of fuel derivatives in place to hedge the different types of fuel used in each division ultra low sulphur 
diesel is used in the uk bus uk coach and european coach  bus divisions and gasoil is used in the uk rail division both are 
hedged by swaps in the same type of fuel diesel used in the north american division is hedged using the heating oil and diesel 
market the timing of the swap cash flows match underlying fuel purchases from 2012 through to 2013 there was no significant 
element of hedge ineffectiveness requiring recognition in the income statement  
during the year £242m of fair value gains 2010 £211m have been transferred to the hedging reserve due to movements in 
market fuel prices fair value movements of £253m 2010 £24m have been transferred from the hedging reserve to the 
income statement following settlement of fuel trades of which £146m was recognised in the hedging reserve at 1 january 2011 
and the remainder was generated during the year due to the movement in market fuel prices 
fuel derivatives can be analysed as follows 
 
31 december 
2011 
fair value 
£m 
31 december 
2010
 fair value  
£m 
31 december 
2011 
volume  
million litres 
31 december 
2010
volume 
million litres 
hedge fuel derivatives     
sterling denominated – uk bus uk coach and uk rail  34 29 806 837 
us dollar denominated – north american bus  32 13 745 649 
euro denominated – european coach  bus  65 79 900 800 
fuel derivatives included in current assets 131 121 2451 2286 
sterling denominated – uk bus uk coach and uk rail  28 26 360 636 
us dollar denominated – north american bus 06 13 397 208 
euro denominated – european coach  bus  27 33 450 750 
fuel derivatives included in noncurrent assetsliabilities 49 72 1207 1594 
total hedge fuel derivatives  180 193 3658 3880  notes to the consolidated accounts  
124
31 financial instruments including cash trade receivables and payables continued 
interest rate swaps at fair value through profit or loss 
on 14 january 2010 the group terminated all outstanding euro interest rate swaps resulting in a net cash outflow of £209m  
for their fair value and accrued interest outstanding this followed the issue of the group’s £350m ten year sterling bond and 
subsequent repayment of the group’s €270m loan on 15 january 2010  
the group continued to account for two us100m denominated interest rate swaps at fair value through profit or loss  
until their maturity in september 2010 the group accounted for their fair market value gain of £02m in 2010 through the  
income statement  
in july 2010 the group entered into four £50m denominated interest rate swaps on a total of £200m of the group’s sterling 
bonds these interest rate swaps all pay floating interest libor  a margin semiannually receive fixed interest annually with 
maturities matching the group’s sterling bonds two swaps with total notional value £100m mature in january 2017 two swaps 
with notional value £100m mature june 2020 and are designated as a fair value hedge of the interest rate risk on £200m of 
these bonds these swaps are measured at fair value through profit or loss with any gains or losses being taken immediately  
to the income statement to offset any fair value gains or losses due to changes in the risk free interest rate on the swapped 
portion of the bonds as at 31 december 2011 a total fair value gain of £175m was recognised in the income statement in 
relation to these swaps this is offset by a fair value loss of £175m on the underlying hedged item in this case changes in  
fair value on the £200m of the group’s bonds due to changes in the risk free interest rate 
32 calledup share capital 
 
2011  
£m 
2010 
£m 
at 31 december   
authorised 
 
 
800000000 2010 800000000 ordinary shares of 5p each 400 400 
issued calledup and fully paid   
511726026 2010 511726026 ordinary shares of 5p each  256 256 
the total number of share options exercised in the year by employees of the group was 1175455 2010 1301553 of which  
nil exercises were satisfied by newly issued shares 2010 nil and 1175455 2010 1301553 exercises were satisfied by 
transferring shares from the national express employee benefit trust 
own shares 
own shares comprise treasury shares and shares held in the employee benefit trust 
treasury shares include 1668688 2010 1668688 ordinary shares in the company no additional shares have been added 
during the year as treasury shares within equity for future issue under the group’s share schemes or cancellation no shares 
were cancelled during the year 2010 nil the market value of these shares at 31 december 2011 was £37m 2010 £42m 
own shares include 380430 2010 477914 ordinary shares in the company that have been purchased by the trustees  
of the national express employee benefit trust the “trust” during the year the trust purchased 991615 2010 714597 
shares and 1175455 2010 1301553 shares were used to satisfy options granted under a number of the company’s share 
schemes the market value of these shares at 31 december 2011 was £09m 2010 £12m the dividends payable on these 
shares have been waived 
continued   
 
 
125
financial statements 
notes to the consolidated accounts 
33 other reserves 
 
merger
 reserve 
£m 
hedging  
reserve  
£m 
translation  
reserve 
£m 
total 
£m 
at 1 january 2011  154 176 921 1251 
hedge movements net of tax – 17 – 17
exchange differences net of tax  – – 235 235
at 31 december 2011  154 159 686 999 
 
the nature and purpose of the other reserves are as follows 
• the merger reserve includes the premium on shares issued to satisfy the purchase of prism rail plc in 2000 the reserve  
is not distributable 
• the hedging reserve records the movements on designated hedging items offset by any movements recognised directly  
in equity on underlying hedged items and 
• the translation reserve records exchange differences arising from the translation of the accounts of foreign currency 
denominated subsidiaries offset by the movements on loans and derivatives used to hedge the net investment in  
foreign subsidiaries 
34 pensions and other postemployment benefits 
a summary of pension benefits and assumptions 
the uk bus and uk coach divisions operate both funded defined benefit schemes and a defined contribution scheme the 
majority of employees of the uk rail companies are members of the appropriate sharedcost section of the railways pension 
scheme rps a funded defined benefit scheme the assets of all schemes are held separately from those of the group 
contributions to the schemes are determined by independent professionally qualified actuaries 
subsidiaries in north america contribute to a number of defined contribution plans the group also provides certain additional 
unfunded postemployment benefits to employees in north america and spain which are disclosed in section c in the  
‘other’ category 
the total pension cost for the year was £117m 2010 £153m of which £35m 2010 £32m relates to the defined  
contribution schemes 
the uk coach plan is now closed to all future accrual a funding plan aimed at bringing the plan to self sufficiency over a six  
year period was agreed in 2010 national express contributes £42m annually to this scheme in 2011 uk bus agreed a £55m 
annual deficit repayment plan with the trustees of the west midlands passenger transport authority pension fund to fund a 
£71m scheme funding deficit over 12 years the plan remains open to accrual for existing members only 
the defined benefit pension liabilityasset included in the balance sheet is as follows 
 
merger
 reserve 
£m 
hedging  
reserve  
£m 
translation  
reserve 
£m 
total 
£m 
at 1 january 2010 154 08 999 1161 
hedge movements net of tax  – 168 – 168 
exchange differences net of tax  – – 78 78
at 31 december 2010  154 176 921 1251 
 
2011  
£m 
2010 
£m 
uk bus  168 53
uk coach  186 – 
uk rail  22 37
other 14 14
total  18 104 notes to the consolidated accounts  
126
34 pensions and other postemployment benefits continued 
a summary of pension benefits and assumptions continued 
the valuations conducted for financial reporting purposes are based on the triennial actuarial valuations a summary of the latest 
triennial actuarial valuations and assumptions made is as follows  
 amounts included in the income statement other comprehensive income and the balance sheet are calculated using the projected unit method 
the range of funding levels and scheme assets for uk rail reflects the range of funding levels and assets in the various  
sections of the rps relating to the franchises which the group operated at 31 december 2011 the plans do not provide 
medical benefits 
the most recent triennial valuations are then updated by independent professionally qualified actuaries for financial reporting 
purposes in accordance with ias 19 the main actuarial assumptions underlying the ias 19 valuations are 
  uk bus  uk coach  uk rail 
date of actuarial valuation 
tayside 
31 march 
2008 
travel west 
midlands  
31 march  
2010 
5 april  
2010 
31 december 
2007 
actuarial method used  attained age attained age  projected unit  projected unit 
rate of investment returns per annum  78 5070  41  5876 
increase in earnings per annum  52 45  –  42 
scheme assets taken at market value  £405m £3820m  £548m  £3551m 
funding level  92 84  68  103109 
   2011   2010 
 uk bus uk coach uk rail uk bus  uk coach  uk rail 
rate of increase in salaries  30 30 30 39 39 39 
rate of increase of pensions  20 30 20 29 35 29 
discount rate  50 50 50 54 54 54 
inflation assumption rpi 30 30 30 35 35 35 
inflation assumption cpi 20 20 20 29 29 29 
expected rates of return on scheme assets       
equities  77 77 77 77 77 77 
bonds  30 30 30 42 42 42 
properties  57 57 57 60 60 60 
other  125 125 125 125 125 125 
postretirement mortality in years       
current pensioners at 65 – male  209 245  194 219  
current pensioners at 65 – male pension under 
£8500 pa or pensionable pay under £30000 pa   205   198 
current pensioners at 65 – male – others    226   215 
current pensioners at 65 – female  236 275  222 248  
current pensioners at 65 – female pension under 
£3000 pa or pensionable pay under £30000 pa    224   217 
current pensioners at 65 – female – others    248   227 
future pensioners at 65 – male  223 266  204 230  
future pensioners at 65 – male pension under 
£8500 pa or pensionable pay under £30000 pa    228   222 
future pensioners at 65 – male – others    249   237 
future pensioners at 65 – female  252 295  231 258  
future pensioners at 65 – female pension under 
£3000 pa or pensionable pay under £30000 pa    249   232 
future pensioners at 65 – female – others    271   242 
continued   
 
 
127
financial statements 
notes to the consolidated accounts 
34 pensions and other postemployment benefits continued 
a summary of pension benefits and assumptions continued 
the demographic assumptions reflect those adopted in the most recent triennial actuarial valuation for the uk rail scheme 
mortality assumptions have been set by reference to the recent experience of the scheme mortality is assumed to improve  
in the future in line with the ‘core projection’ model published by the actuarial profession’s continuous mortality investigation 
incorporating a longterm improvement rate of 15 pa 
the directors regard the assumption around the discount rate to be the key assumption in the ias 19 valuation and the 
following table provides an approximate sensitivity analysis of the impact of a 01 change in the discount rate assumption 
scheme assets are stated at their market values at the respective balance sheet dates the expected rate of return on scheme 
assets is determined based on market returns on each category of scheme assets 
b accounting for the railways pension scheme  
the majority of employees of the uk rail companies are members of the appropriate section of the rps a funded defined 
benefit scheme the rps is a shared cost scheme which means that costs are formally shared 60 employer and 40 
employee to date the group has experienced eleven changes of uk rail franchise ownership where the current owner has 
funded the scheme during the franchise term and the pension deficit at franchise exit has transferred to the new owner without 
cash settlement by entering into the franchise contract the toc becomes the designated employer for the term of the contract 
and under the rules of the rps must fund its share of the pension liability in accordance with the schedule of contributions 
agreed with the scheme trustees and actuaries  
in determining the appropriate accounting policy for the rps to ensure that the group’s accounts present fairly its financial 
position financial performance and cash flows management has consulted with toc industry peers and has concluded that  
the group’s constructive obligations should be accounted for in accordance with ias 19 this accounting policy which in all 
other respects is consistent with that set out in this note for the group’s other defined benefit schemes means that the group’s 
accounts reflect that element of the deficits anticipated to be settled by the group during the franchise term and will prevent 
gains arising on transfer of the existing rps deficits to a new owner at franchise exit  
in calculating the group’s constructive obligations in respect of the rps the group has calculated the total pension deficits  
in each of the rps sections in accordance with ias 19 and the assumptions set out above these deficits are reduced  
by a ‘franchise adjustment’ which is that portion of the deficit projected to exist at the end of the franchise and which the  
group will not be required to fund the franchise adjustment which has been calculated by the group’s actuaries is offset 
against the present value of the rps liabilities so as to fairly present the financial performance position and cash flows of the 
group’s obligations  
the franchise adjustment decreased from £724m at 31 december 2010 to £596m at 31 december 2011 the decrease is 
caused by interest on the franchise adjustment of £39m and net actuarial movements of £167m in the prior year the franchise 
adjustment decreased from £817m at 31 december 2009 to £724m at 31 december 2010 the decrease was caused by 
interest on the franchise adjustment of £47m and net actuarial movements of £140m  
 
uk bus  
£m 
uk coach  
£m 
uk rail
 £m 
defined benefit pension liabilityasset at 31 december 2011  168 186 22
effect of a 01 increase in the discount rate  66 11 01 
current service cost for the year ended 31 december 2011  41 01 103
effect of a 01 increase in the discount rate  01 – 02  notes to the consolidated accounts  
128
34 pensions and other postemployment benefits continued 
c financial results for pension benefits 
the amounts charged to the group income statement and group statement of comprehensive income for the years ended 
31 december 2011 and 2010 are set out in the following tables  
group income statement 
uk bus 
2011 
£m 
uk coach  
2011 
£m 
uk rail  
2011 
£m 
total 
2011
£m 
amounts chargedcredited to group operating profitloss 
    
current service cost  41 01 103 145
expected return on pension scheme assets  251 35 144 430 
interest on pension liabilities  229 29 148 406
interest on franchise adjustment – – 39 39 
total chargecredit to income statement  19 05 68 82
actual return on plan assets 178 132 10 320 
 
group statement of comprehensive income 
uk bus 
2011
 £m 
uk coach  
2011 
£m 
uk rail  
2011 
£m 
total 
2011
£m 
actual return less expected return on pension scheme assets  73 97 134 110
other actuarial gains and losses  124 25 123 24 
actuarial lossesgains  197 122 11 86
 
group income statement 
uk bus 
2010 
£m 
uk coach  
2010 
£m 
uk rail  
2010 
£m 
total 
2010
£m 
amounts chargedcredited to group operating profitloss   
current service cost  44 08 109 161
curtailment gain included within exceptional items – 23 – 23 
expected return on pension scheme assets  242 32 129 403 
interest on pension liabilities  251 32 150 433
interest on franchise adjustment – – 47 47 
total chargecredit to income statement  53 15 83 121
actual return on plan assets 455 55 190 700 
 
 
group statement of comprehensive income 
uk bus 
2010
 £m 
uk coach  
2010 
£m 
uk rail  
2010 
£m 
total 
2010
£m 
actual return less expected return on pension scheme assets  213 23 61 297 
other actuarial gains and losses  168 23 99 46 
actuarial gainlosses 381 – 38 343 
continued   
 
 
129
financial statements 
notes to the consolidated accounts 
34 pensions and other postemployment benefits continued 
c financial results for pension benefits continued  
the amounts recognised in the balance sheet at 31 december are 
as at 31 december 2011 
uk bus 
2011
 £m 
uk coach 
2011
£m 
uk rail  
2011
£m 
other  
2011 
£m 
total 
2011
£m 
equities  1917 – 3037 – 4954 
bonds  2342 636 151 – 3129 
property  36 – – – 36 
other  24 43 22 – 89 
fair value of scheme assets  4319 679 3210 – 8208 
present value of scheme liabilities  4487 493 4233 14 9227
franchise adjustment  – – 596 – 596 
defined benefit obligation  4487 493 3637 14 8631
members’ share of deficit  – – 405  405 
defined benefit pension deficitsurplus 168 186 22 14 18
 
the movement in the present value of the defined benefit obligation in the year is as stated below for uk rail the rps is  
a shared cost scheme which means that costs are formally shared 60 employer and 40 employee 
the group’s defined benefit obligation comprises £8617m 2010 £8672m including the members’ share of the deficit arising 
from plans that are wholly or partly funded and £14m 2010 £14m from unfunded plans 
 
as at 31 december 2010 
uk bus 
2010
 £m 
uk coach 
2010
£m 
uk rail  
2010
£m 
other  
2010 
£m 
total 
2010
£m 
equities  1976 293 3037 – 5306 
bonds  1475 287 138 – 1900 
property  792 – 02 – 794 
other  52 16 06 – 74 
fair value of scheme assets  4295 596 3183 – 8074 
present value of scheme liabilities  4348 596 4452 14 9410
franchise adjustment  – – 724 – 724 
defined benefit obligation  4348 596 3728 14 8686
members’ share of deficit  – – 508 – 508 
defined benefit pension deficit 53 – 37 14 104
 
uk bus 
 £m 
uk coach 
£m 
uk rail  
£m 
other  
£m 
total 
£m 
defined benefit obligation at 1 january 2011 4348 596 3728 14 8686
current service cost  41 01 103 – 145
benefits paid  268 15 145 – 428 
contributions by employees 13 – 61 – 74
finance charge 229 29 148 – 406
interest on franchise adjustment  – – 39 – 39 
settlement – 93 – – 93 
members’ share of movement on liabilities – – 96 – 96 
actuarial lossgain recognised in statement  
of comprehensive income 124 25 123 – 24 
defined benefit obligation at 31 december 2011 4487 493 3637 14 8631 notes to the consolidated accounts  
130
34 pensions and other postemployment benefits continued 
c financial results for pension benefits continued 
the movement in the fair value of scheme assets is as follows 
 
uk bus 
£m 
uk coach  
£m 
uk rail  
£m 
total 
£m 
fair value of scheme assets at 1 january 2011  4295 596 3183 8074 
expected return on plan assets  251 35 144 430 
cash contributions – employer  100 60 95 255 
cash contributions – employee  14 – 61 75 
benefits paid  268 15 145 428
members’ share of return on assets  – – 06 06 
actuarial lossgain recognised in statement  
of comprehensive income 73 97 134 110
settlement – 94 – 94
fair value of scheme assets at 31 december 2011 4319 679 3210 8208 
 
 
 
uk bus 
 £m 
uk coach 
£m 
uk rail  
£m 
other  
£m 
total 
£m 
defined benefit obligation at 1 january 2010  4463 568 3420 14 8465
current service cost  44 08 109 – 161
benefits paid  256 15 145 – 416 
contributions by employees 14 03 65 – 82
finance charge 251 32 150 – 433
curtailment gain – 23 – – 23 
interest on franchise adjustment  – – 47 – 47 
members’ share of movement on liabilities – – 77 – 77
actuarial gainloss recognised in statement  
of comprehensive income 168 23 99 – 46 
defined benefit obligation at 31 december 2010 4348 596 3728 14 8686
 
uk bus 
£m 
uk coach  
£m 
uk rail  
£m 
total 
£m 
fair value of scheme assets at 1 january 2010 3999 516 2844 7359 
expected return on plan assets  242 32 129 403 
cash contributions – employer  83 37 102 222 
cash contributions – employee  14 03 65 82 
benefits paid  256 15 145 416
members’ share of return on assets  – – 127 127 
actuarial gain recognised in statement of comprehensive income 213 23 61 297 
fair value of scheme assets at 31 december 2010  4295 596 3183 8074 
continued   
 
 
131
financial statements 
notes to the consolidated accounts 
34 pensions and other postemployment benefits continued 
c financial results for pension benefits continued 
the group expects to contribute £133m to its defined benefit pension plans in 2012  
the cumulative amount of actuarial gains and losses recognised in the statement of comprehensive income since 1 january 
2004 is £192m loss 2010 £106m loss the directors are unable to determine how much of the pension scheme deficit 
recognised on transition to ifrss and taken directly to equity of £519m is attributable to actuarial gains and losses since 
inception of those pension schemes consequently the directors are unable to determine the amount of actuarial gains and 
losses that would have been recognised in the statement of comprehensive income before 1 january 2004 
history of experience gains and losses 
2011 
£m 
2010
 £m 
2009
 £m 
2008  
£m 
2007 
£m 
uk bus      
fair value of scheme assets  4319 4295 3999 3628  4120 
present value of defined benefit obligation 4487 4348 4463 3574  4124 
restriction on surplus  – – 90  47
deficit in the scheme 168 53 464  36  51
experience adjustments arising on liabilities  233 01 02 33  46 
experience adjustments arising on assets  73 213 313 628  52 
uk coach     
fair value of scheme assets  679 596 516 421  437 
present value of defined benefit obligation  493 596 568 433  486 
deficit in the scheme  186 – 52 12  49
experience adjustments arising on liabilities  01 27 – –  22
experience adjustments arising on assets 97 23 38  78  06
uk rail     
fair value of scheme assets  3210 3183 2844 4447  6203 
present value of defined benefit obligation  3637 3728 3420 5267  6531 
members’ share of deficit  405 508 557 433  140 
deficit in the scheme 22 37 19  387  188
experience adjustments arising on liabilities  85 122 11 169  53
experience adjustments arising on assets  134 61 232 1214  32 
other     
fair value of scheme assets  – – – –  – 
present value of defined benefit obligation 14 14 14  15  10
deficit in the scheme 14 14 14 15 10
experience adjustments arising on liabilities – – – –  –  notes to the consolidated accounts  
132
35 commitments and contingencies 
operating lease commitments 
the group’s total operating lease commitments are as follows 
operating lease commitments  
the majority of the group’s commitments arise in the uk rail division uk rail division companies have contracts with network 
rail infrastructure limited for access to the railway infrastructure tracks stations and depots they also have contracts under 
which rolling stock is leased the tocs’ obligations to fulfil these commitments exist only as part of their franchise agreement 
the table below reflects the commitments up to the current franchise end dates unless an extension or new franchise agreement 
has been signed the commitments are based on charges advised by the rail regulator for the period starting on 1 april 2010 
commitments for future minimum rental payments under these contracts are shown below 
fixed track access agreements have an average remaining life of 10 years 2010 11 years other land and buildings have  
an average duration of 10 years 2010 12 years rolling stock agreements have an average life of 09 years 2010 10 years 
and other plant and equipment 12 years 2010 19 years 
  
2011  
£m 
2010 
£m 
future minimum rentals payable under noncancellable operating leases   
within one year  land and buildings  366 824 
 plant and equipment  464 1580 
  830 2404 
after one year but not more than five years  land and buildings  312 467 
 plant and equipment  435 757 
  747 1224 
more than five years  land and buildings  320 338 
 plant and equipment  09 58 
  329 396 
  1906 4024 
   
land and 
buildings   
plant and 
equipment 
uk rail division commitments   
2011 
£m 
2010  
£m 
2011  
£m 
2010 
£m 
future minimum rentals payable under noncancellable operating leases    
within one year  fixed track access 148 478 – – 
 rolling stock  – – 362 1451 
 other  74 211 08 11 
  222 689 370 1462 
after one year but not more than five years  fixed track access 41 134 – – 
 rolling stock – – 94 316 
 other 22 68 03 10 
  63 202 97 326 
  285 891 467 1788 
continued   
 
 
133
financial statements 
notes to the consolidated accounts 
35 commitments and contingencies continued 
outside of the uk rail division the group has entered into operating leases on certain properties public service vehicles and 
various items of plant and equipment commitments for future minimum rental payments under cancellable operating leases  
are shown below 
the average remaining life of operating lease commitments in the other divisions is 40 years 2010 41 years for land and 
buildings 35 years 2010 38 years for public service vehicles and 24 years 2010 27 years for other plant and equipment 
operating lease agreements where the group is the lessor 
the group receives rent on properties as follows 
the leases have an average unexpired duration of 13 years 2010 15 years 
finance lease commitments 
the group has finance leases for public service vehicles and various items of plant and equipment these leases have terms of 
renewal but no purchase options and escalation clauses renewals are at the option of the specific entity that holds the lease 
capital commitments 
the group is committed to vehicle purchases and various land and buildings improvements 
contingent liabilities 
bonds and letters of credit 
in the ordinary course of business the group is required to issue counterindemnities in support of its operations as at 
31 december 2011 there were uk rail performance bonds of £258m 2010 £258m and uk rail season ticket bonds of 
£923m 2010 £850m the group has other performance bonds which include the £90m 2010 £179m performance bond  
in respect of intercapital and regional rail limited a performance bond with birmingham city council relating to the building of 
the new coach station of £02m 2010 £nil performance bonds in respect of businesses in the us of £1081m 2010 £1002m 
and the rest of europe of £233m 2010 £256m letters of credit have been issued to support insurance retentions of £308m 
2010 £394m 
 land and buildings public service vehicles  other 
other divisions’ commitments 
2011 
£m 
2010 
£m 
2011 
£m 
2010  
£m 
2011  
£m 
2010 
£m 
within one year  144 135 92 109 02 09 
after one year but not more than five years  249 265 335 415 03 16 
more than five years 320 338 09 58 – – 
 713 738 436 582 05 25 
 
2011  
£m 
2010 
£m 
future minimum rentals receivable under noncancellable operating leases   
within one year  14 41 
after one year but not more than five years  04 14 
more than five years  – – 
 18 55 
  2011   2010 
 
minimum 
payments 
£m 
present value  
of payments  
£m 
minimum 
payments  
£m 
present value 
of payments 
£m 
within one year  226 221 282 278 
after one year but not more than five years  954 859 831 735 
more than five years  514 433 385 303 
total minimum lease payments  1694 1513 1498 1316 
less future financing charges 181 – 182 – 
present value of minimum lease payments  1513 1513 1316 1316 
 
2011  
£m 
2010 
£m 
contracted  437 311  notes to the consolidated accounts  
continued 134
36 related party transactions 
amounts due to icrrl are included in provisions as disclosed in note 26 
a provision of £02m 2010 £04m has been booked against amounts due from european coach  bus associates which  
are presented net 
property transactions  
there are no longer any related party transactions in north america and all of the transactions in prior years related to senior 
employees who left the business prior to 2011 
a number of spanish companies have leased properties from companies related to the cosmen family jorge cosmen is a  
nonexecutive director of the group and was appointed as deputy chairman in october 2008 these leases were in place 
before the group’s acquisition of alsa and are for appropriate market rates  
compensation of key management personnel of the group 
 amount of transactions 
 amounts due from  
related parties  amounts due to related parties 
 
2011 
£m 
2010 
£m 
2011
 £m 
2010 
 £m 
2011 
 £m 
2010
 £m 
associates       
icrrl  90 87 – – 90 182
spain associates  26 16 10 08 10 11
total associates  116 103 10 08 100 193
trade investments       
spain trade investments  43 42 06 09 05 03
property transactions       
stock transportation – 05 – – – – 
spain  50 50 04 04 02 04
durham school services – 01 – – – – 
total other related parties  93 98 10 13 07 07
total  209 201 20 21 107 200
 
2011  
£m 
2010 
£m 
total compensation paid to key management personnel note 7  35 47  
 
 
135
financial statements 
notes to the consolidated accounts 
37 cash flow statement 
the net cash inflows from operating activities include outflows of £82m 2010 £526m from continuing operations which  
are related to exceptional costs incurred in the prior year 
a reconciliation of group profit before tax to cash generated from operations 
b analysis of changes in net debt 
 excludes accrued interest on bonds 
shortterm deposits included within liquid resources relate to term deposits repayable within three months 
borrowings include noncurrent interest bearing borrowings of £7184m 2010 £6744m as disclosed in note 28 
other noncash movements in net debt represent finance lease additions of £437m 2010 £771m and £22m 2010 £44m 
amortisation of loan and bond arrangement fees 
total operations 
2011  
£m 
2010 
£m 
net cash inflow from operating activities   
profit before tax from continuing operations  1294 402 
loss before tax from discontinued operations  – 05
net finance costs  464 460 
share of post tax results under the equity method 14 03
depreciation of property plant and equipment  1055 998 
intangible asset amortisation  508 571 
amortisation of fixed asset grants  15 17
loss on disposal of property plant and equipment 11 66 
sharebased payments 50 39 
increase in inventories  14 12
increase in receivables  188 330
decreaseincrease in payables  289 209 
decrease in provisions – continuing operations 370 124
decrease in provisions – discontinued operations – 33
cash generated from operations  2470 2221 
 
at 
1 january 
2011 
£m 
cash flow 
£m 
acquisitions
disposals 
£m 
exchange 
differences  
£m 
other 
movements  
£m 
at 
31 december 
2011 
£m 
cash  815 163 – 04 – 648 
overnight deposits  368 118 – – – 250 
other shortterm deposits  105 78 – – – 27 
cash and cash equivalents  1288 359 – 04 – 925 
other debt receivables  07 – – – – 07 
borrowings      
 
 bank loans 398 345 10 03 19 79
 bonds 5656 – – – 178 5834
 fair value of bond hedging derivatives 11 – – – 175 164 
 finance lease obligations  1316 249 – 09 437 1513
 other debt payable  18 11 – – – 07
total borrowings 7399 605 10 06 459 7269
net debt  6104 246 10 10 459 6337 notes to the consolidated accounts  
136
37 cash flow statement continued 
b analysis of changes in net debt continued 
 excludes accrued interest on bonds 
c reconciliation of net cash flow to movement in net debt 
38 post balance sheet events 
on 5 february 2012 the group passed over the running of the east anglia rail franchise to abellio greater anglia limited 
 
 
at 
1 january 
2010 
£m 
cash flow 
£m 
acquisitions
disposals 
£m 
exchange 
differences  
£m 
other 
movements  
£m 
at 
31 december 
2010
£m 
cash  583 239 01 08 – 815 
overnight deposits  120 250 – 02 – 368 
other shortterm deposits  355 250 – – – 105 
cash and cash equivalents  1058 239 01 10 – 1288 
other debt receivables  08 01 – – – 07 
borrowings       
 bank loans 6877 6426 – 89 36 398
 bonds – 5659 – – 03 5656
 fair value of bond hedging derivatives – – – – 11 11
 finance lease obligations  756 187 – 24 771 1316
 other debt payable  12 06 – – – 18
total borrowings 7645 948 – 113 815 7399
net debt  6579 1186 01 103 815 6104
 
2011  
£m 
2010 
£m 
decreaseincrease in cash and cash equivalents in the year  359 239 
cash inflow from movement in other debt receivables  – 01
cash outflow from movement in debt and finance leases  605 948 
change in net debt resulting from cash flows  246 1186 
change in net debt resulting from acquisitions and disposals  10 01 
change in net debt resulting from noncash movements 469 712
movement in net debt in the year  233 475 
opening net debt 6104 6579
net debt  6337 6104
continued  independent auditor’s report  
to the members of national  
express group plc 
 
137
financial statements 
independent auditor’s report 
we have audited the parent company financial statements of national express group plc for the year ended 31 december 
2011 which comprise the parent company balance sheet and the related notes 1 to 20 the financial reporting framework that 
has been applied in their preparation is applicable law and united kingdom accounting standards united kingdom generally 
accepted accounting practice 
this report is made solely to the company’s members as a body in accordance with chapter 3 of part 16 of the companies 
act 2006 our audit work has been undertaken so that we might state to the company’s members those matters we are 
required to state to them in an auditor’s report and for no other purpose to the fullest extent permitted by law we do not  
accept or assume responsibility to anyone other than the company and the company’s members as a body for our audit  
work for this report or for the opinions we have formed 
respective responsibilities of directors and auditor 
as explained more fully in the directors’ responsibilities statement the directors are responsible for the preparation of the 
parent company financial statements and for being satisfied that they give a true and fair view our responsibility is to audit  
and express an opinion on the parent company financial statements in accordance with applicable law and international 
standards on auditing uk and ireland those standards require us to comply with the auditing practices board’s ethical 
standards for auditors 
scope of the audit of the financial statements 
an audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material misstatement whether caused by fraud or error this includes  
an assessment of whether the accounting policies are appropriate to the parent company’s circumstances and have been 
consistently applied and adequately disclosed the reasonableness of significant accounting estimates made by the directors 
and the overall presentation of the financial statements in addition we read all the financial and nonfinancial information in the 
annual report to identify material inconsistencies with the audited financial statements if we become aware of any apparent 
material misstatements or inconsistencies we consider the implications for our report 
opinion on financial statements 
in our opinion the parent company financial statements 
• give a true and fair view of the state of the company’s affairs as at 31 december 2011 
• have been properly prepared in accordance with united kingdom generally accepted accounting practice and 
• have been prepared in accordance with the requirements of the companies act 2006 
opinion on other matters prescribed by the companies act 2006 
in our opinion 
• the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the companies 
act 2006 and 
• the information given in the directors’ report for the financial year for which the financial statements are prepared is 
consistent with the parent company financial statements 
matters on which we are required to report by exception 
we have nothing to report in respect of the following matters where the companies act 2006 requires us to report to you if  
in our opinion 
• adequate accounting records have not been kept by the parent company or returns adequate for our audit have not been 
received from branches not visited by us or 
• the parent company financial statements and the part of the directors’ remuneration report to be audited are not in 
agreement with the accounting records and returns or 
• certain disclosures of directors’ remuneration specified by law are not made or 
• we have not received all the information and explanations we require for our audit 
other matter 
we have reported separately on the group financial statements of national express group plc for the year ended  
31 december 2011  
nigel mercer senior statutory auditor 
for and on behalf of deloitte llp chartered accountants and statutory auditor 
birmingham uk 
29 february 2012  company balance sheet  
at 31 december 2011 
 
138
 
d finch group chief executive  
j k maiden group finance director 
29 february 2012 
company number 2590560 
 note 
2011  
£m 
2010 
£m 
fixed assets    
tangible assets  4  01 – 
investments  5  11856 7660 
derivative financial instruments 6 237 – 
  12094 7660 
current assets    
debtors  7  9738 14488 
derivative financial instruments  6  80 42 
cash at bank and in hand  8  322 80 
  10140 14610 
creditors amounts falling due within one year  9  9504 9851
derivative financial instruments  6 02 103
net current assets   634 4656 
total assets less current liabilities   12728 12316 
creditors amounts falling due after more than one year  10  5834 5656
derivative financial instruments  6  – 51
provisions for liabilities and charges  11  145 251
deferred tax liability 12 – – 
net assets   6749 6358 
shareholders’ equity    
calledup share capital  14  256 256 
share premium account  15  5327 5327 
capital redemption reserve  15 02 02 
own shares  15 140 141
profit and loss account  15  1304 914 
shareholders’ equity   6749 6358  notes to the company accounts 
 
139
financial statements 
notes to the company accounts 
1 accounting policies  
basis of preparation  
the separate accounts of the parent company are presented as required by the companies act 2006 the accounts have been 
prepared under the historic cost convention except for the recognition of derivative financial instruments and available for sale 
investments detailed below and in accordance with applicable accounting standards in the united kingdom  
in applying these policies management is required to make estimates and assumptions that affect the reported amounts of 
assets and liabilities and disclosure of contingent assets and liabilities at the date of the accounts and the reported amounts  
of revenue and expenses during the reporting period actual results could differ from those estimates  
no profit and loss account is presented by the company as permitted by section 408 of the companies act 2006  
the retained profit of the company for the year is £847m 2010 £706m 
leases  
leases of tangible fixed assets where substantially all the risks and rewards of ownership of the asset have passed to the 
company are classified as finance leases and the assets are capitalised in the balance sheet as plant and equipment finance 
leases are capitalised at the present value of the minimum lease payments the capital element of future obligations under hire 
purchase contracts and finance leases is included as a liability in the balance sheet the interest element of rental obligations is 
charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of capital 
repayments outstanding assets acquired under finance leases are depreciated over the shorter of the useful life of the asset  
and the lease term  
leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as 
operating leases rentals paid under operating leases are charged to the profit and loss account on a straightline basis over  
the term of the lease incentives received under operating leases and initial direct costs in negotiating the lease are amortised  
to the profit and loss account on a straightline basis over the term of the lease or to the first review if shorter  
tangible fixed assets  
tangible fixed assets are stated at historic cost less accumulated depreciation and any impairment tangible fixed assets are 
depreciated on a straightline basis over their estimated useful lives as follows  
the carrying value of fixed assets is reviewed for impairment if events or changes in circumstances indicate that the current 
carrying value may not be recoverable and are written down immediately to their recoverable amount repairs and maintenance 
are charged to the profit and loss account during the financial period in which they are incurred  
investments in subsidiaries  
investments are held at historic cost less any provision for impairment  
available for sale investments  
available for sale financial assets are nonderivative financial assets that are designated as such or that are not classified as  
a loan or receivable held to maturity or at fair value through profit or loss after initial recognition these assets are measured at 
fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or the 
investment is determined to be impaired at which time the previously reported cumulative gain or loss is included in the income 
statement  
interest bearing loans and borrowings  
loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs after initial 
recognition interestbearing loans and borrowings are subsequently measured at amortised cost using the effective  
interest method  
hedge accounting is adopted where derivatives such as fixed to floating interest rate swaps are held as fair value hedges against 
fixed interest rate borrowings under fair value hedge accounting fixed interest rate borrowings are revalued at each balance 
sheet date by the change in fair value attributable to the interest rate being hedged  
plant and equipment  – 3 to 5 years   notes to the company accounts  
 
140
1 accounting policies continued 
provisions  
provisions are recognised when the company 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 a reliable estimate of the amount can be made 
where the company expects a provision to be reimbursed the reimbursement is recognised as a separate asset but only when 
reimbursement is virtually certain  
pensions  
the company participates in both the national express group multiemployer funded defined benefit scheme and a defined 
contribution scheme the company is unable to identify its share of the underlying assets and liabilities of the multiemployer 
scheme on a consistent and reasonable basis and therefore has accounted for the scheme as if it were a defined contribution 
scheme under the requirements of frs 17 ‘retirement benefits’  
sharebased payment  
in accordance with the transition provisions frs 20 has been applied to all grants after 7 november 2002 that were unvested  
as of 1 january 2005  
the company awards equitysettled sharebased payment to certain employees equitysettled sharebased payments are 
measured at fair value at the date of grant by an external valuer using a stochastic model nonmarketbased performance
related vesting conditions are not taken into account when estimating the fair value instead those nonmarket conditions are 
taken into account in calculating the current best estimate of the number of shares that will eventually vest and at each balance 
sheet date before vesting the cumulative expense is calculated based on that estimate marketbased performance conditions 
are taken into account when determining the fair value and at each balance sheet date before vesting the cumulative expense  
is calculated irrespective of whether or not the market conditions are satisfied provided that all other performance conditions  
are met  
deferred tax  
deferred tax is recognised in respect of all material timing differences that have originated but not reversed by the balance sheet 
date deferred tax is measured on a nondiscounted basis at tax rates that are expected to apply in the periods in which the 
timing differences reverse based on tax rates and laws enacted or substantively enacted at the balance sheet date deferred tax 
assets are recognised where it is more likely than not that there will be suitable taxable profits from which the future reversal of 
underlying timing differences can be deducted  
foreign currencies  
foreign currency assets and liabilities are translated into sterling at the rates of exchange ruling at the year end foreign currency 
transactions arising during the year are translated into sterling at the rate of exchange ruling on the date of the transaction any 
exchange differences so arising are dealt with through the profit and loss account  
derivative financial instruments  
the company uses derivative financial instruments such as foreign currency contracts and interest rate swaps to hedge its risks 
associated with foreign currency and interest rate fluctuations such derivative financial instruments are initially recognised at fair 
value and subsequently remeasured to fair value for the reported balance sheet the fair value of forward exchange contracts 
and interest rate swaps is calculated by reference to market exchange rates and interest rates at the period end  
in relation to cash flow hedges which meet the conditions for hedge accounting the portion of the gain or loss on the hedging 
instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective portion in the profit  
and loss account the gains or losses deferred in equity in this way are recycled through the profit and loss account in the  
same period in which the hedged underlying transaction or firm commitment is recognised in the profit and loss account  
for derivatives that do not qualify for hedge accounting including the foreign currency contracts gains or losses are taken 
directly to the profit and loss account in the period  
hedge accounting is discontinued when the hedging instrument expires is sold terminated or exercised or no longer qualifies 
for hedge accounting  
the company has taken advantage of the exemption under frs 29 for parent company accounts the disclosures are included 
within the consolidated accounts 
continued   
 
141
financial statements 
notes to the company accounts 
2 exchange rates 
the most significant exchange rates to the pound for the company are as follows 
3 directors’ emoluments 
detailed information concerning directors’ emoluments shareholdings and options is shown in the directors’ remuneration 
report 
4 tangible fixed assets 
tangible fixed assets held under finance lease agreements are analysed as follows 
leased assets and assets under hire purchase contracts are pledged as security for the related finance lease and hire  
purchase liabilities 
 2011 2010 
 closing rate average rate closing rate average rate 
us dollar  155 161 156 155 
canadian dollar  158 158 156 161 
euro  120 115 117 117 
 
plant and 
equipment 
£m 
cost  
at 1 january 2011  20 
additions  01 
at 31 december 2011 21 
depreciation  
at 1 january 2011 and at 31 december 2011 20 
net book value  
at 31 december 2011  01 
at 31 december 2010  – 
 
2011 
£m 
2010
£m 
plant and equipment   
– cost  02 02 
– depreciation  02 02
 – –  notes to the company accounts  
 
142
5 financial assets investments 
the information provided below is given for the company’s principal subsidiaries a full list of subsidiaries and investments will  
be annexed to the next annual return to companies house the principal country of operation in respect of the companies 
below is the country in which they are incorporated 
the group’s train passenger services in the uk are operated through franchises awarded by dft rail as delegated by the  
uk government 
the following holdings are 100 held directly by the company 
incorporated in england and wales  
national express intermediate holdings limited holding company for all group operating companies except uk rail 
national express trains limited  holding company for uk rail operating companies 
 
other investments include 
the £1473m disposal of investments in subsidiaries in 2011 relates to previously owned holding companies that were sold to 
national express intermediate holdings limited in exchange for shares in that company the £5669m of additions represents 
the acquisition of shares in national express intermediate holdings limited during the year including shares that were received  
in exchange for amounts owed by subsidiary undertakings 
   
investments in 
subsidiaries
 £m 
cost or valuation    
at 1 january 2011   12719 
additions   5669 
disposals   1473
at 31 december 2011   16915 
provisions    
at 1 january 2011    5059
release   – 
at 31 december 2011   5059
net carrying amount    
at 31 december 2011    11856 
at 31 december 2010    7660 
incorporated in guernsey  
national express guernsey limited  insurance captive 
name  country of registration  class of share 
proportion held 
 
intercapital and regional rail limited icrrl  england and wales  ordinary shares  400 
continued   
 
143
financial statements 
notes to the company accounts 
6 derivative financial instruments 
full details of the group’s financial risk management objectives and policies can be found in note 30 of the consolidated 
accounts as the holding company for the group the company faces similar risks over foreign currency and interest  
rate movements 
the company has taken advantage of the exemption under frs 29 for parent company accounts the disclosures are included 
within the consolidated accounts 
7 debtors 
8 cash at bank and in hand 
cash at bank and in hand earns interest at floating rates based on daily bank deposit rates shortterm deposits are made  
for varying periods of between one day and three months depending on the immediate cash requirements of the company  
and earn interest at the respective shortterm deposit rates the fair value of cash equals the carrying value 
9 creditors amounts falling due within one year 
trade creditors are noninterest bearing and are normally settled on 30 day terms and other creditors are noninterest bearing 
and have an average term of six months 
accrued interest on bonds of £304m was presented in other payables in the 2010 financial accounts in 2011 this has been 
included within bonds – accrued interest 
 
2011  
£m 
2010 
£m 
interest rate derivatives 237 – 
derivative financial assets due over one year 237 – 
interest rate derivatives  – 38 
foreign exchange forward contracts 80 04 
derivative financial assets due under one year  80 42 
interest rate derivatives  – 51
derivative financial liabilities due over one year  – 51
foreign exchange forward contracts  02 103
derivative financial liabilities due under one year  02 103
 
2011  
£m 
2010 
£m 
trade debtors  – 02 
amounts owed by subsidiary undertakings  9405 14151 
corporation tax recoverable 271 310 
deferred tax asset see note 12  13 16 
other debtors  01 03 
prepayments and accrued income  48 06 
 9738 14488 
 
2011  
£m 
2010 
£m 
shortterm deposits  250 60 
cash at bank  72 20 
 322 80 
 
2011  
£m 
2010 
£m 
bank overdraft 1256 1524 
bank loans  – 353 
trade creditors  07 68 
amounts owed to subsidiary undertakings  7745 7531 
accruals and deferred income  197 71 
bonds – accrued interest 299 304 
 9504 9851  notes to the company accounts  
 
144
10 creditors amounts falling due after more than one year 
11 provisions for liabilities and charges 
1
 the insurance claims provision arises from estimated exposures at the year end the majority of which will be utilised in the next five years  
and comprise provisions for existing claims arising in the uk and north america 
2
 a provision was recognised in 2006 for the company’s onerous contract for eurostar with icrrl £90m 2010 £87m was paid to icrrl  
during the year the remainder has been settled in 2012 
12 deferred tax 
the major components of the provision for deferred taxation are as follows 
the reconciliation of deferred tax balances is as follows 
timing differences associated with group investments 
no deferred tax 2010 £nil is recognised on the unremitted earnings of subsidiaries and associates as no dividends have  
been accrued as receivable and no binding agreement to distribute the past earnings in future has been entered into by  
the subsidiaries 
unrecognised tax losses 
deferred income tax assets are recognised for tax loss carryforwards to the extent that the realisation of the related tax benefit 
against future taxable profits is probable deferred tax assets that the company has not recognised in the accounts amount to 
£92m 2010 £47m which arise where the company does not expect to generate sufficient suitable future profits  
 
2011  
£m 
2010 
£m 
bonds 5834 5656
 
insurance 
claims
1
 
£m 
eurostar  
onerous  
contract
2
 
£m 
 
other 
£m 
total
 £m 
at 1 january 2011 50 182 19 251 
chargedreleased to profit and loss account  02 02 – – 
utilised in the year  02 90 14 106
at 31 december 2011 50 90 05 145 
 
2011  
£m 
2010 
£m 
accelerated capital allowances  02 03 
other timing differences  04 05 
losses carried forward 07 08 
net deferred tax asset  13 16 
 £m 
deferred tax asset at 1 january 2011  16 
credited to profit and loss 03
deferred tax asset at 31 december 2011 13 
continued   
 
145
financial statements 
notes to the company accounts 
13 interestbearing loans and borrowings 
the effective interest rates at the balance sheet date were as follows 
details of the company’s interest rate management strategy and interest rate swaps are included in note 30 and note 31 of the 
consolidated accounts 
14 calledup share capital 
 
2011  
£m 
2010
 £m 
at 31 december   
authorised   
800000000 2010 800000000 ordinary shares of 5p each 400 400 
issued calledup and fully paid   
511726026 2010 511726026 ordinary shares of 5p each  256 256 
the total number of share options exercised in the year by employees of the group was 1175455 2010 1301553 of which  
nil exercises were satisfied by newly issued shares 2010 nil and 1175455 2010 1301553 exercises were satisfied by 
transferring shares from the national express employee benefit trust 
 
2011 
£m maturity effective interest rate 
2010 
£m maturity  effective interest rate 
current 
   
   
bank overdraft  1256 on demand libor 1 1524 on demand libor 1 
sterling bank loans  – – – 353 2014 libor 145 
bonds – accrued 
interest 299   304 
  
total current  1555   2181 
  
noncurrent       
7 year sterling bond 3516 january 2017 654 3450 january 2017 654 
10 year sterling bond 2318 june 2020 685 2206 june 2020 685 
bonds 5834 
  
5656 
  
total noncurrent  5834   5656 
   notes to the company accounts  
 
146
15 shareholders’ funds and statement of changes in shareholders’ equity 
own shares comprise treasury shares and shares held in the employee benefit trust 
treasury shares include 1668688 2010 1668688 ordinary shares in the company no additional shares have been added  
as treasury shares within equity for future issue under the group’s share schemes or cancellation no shares were cancelled 
during the year 2010 nil the market value of these shares at 31 december 2011 was £37m 2010 £42m 
own shares include 380430 2010 477914 ordinary shares in the company that have been purchased by the trustees  
of the national express employee benefit trust the ‘trust’ during the year the trust purchased 991615 2010 714597 
shares and 1175455 2010 1301553 shares were used to satisfy options granted under a number of the company’s share 
schemes the market value of these shares at 31 december 2011 was £09m 2010 £12m the dividends payable on these 
shares were waived in 2011 
16 retirement benefits 
the company participates in both the national express group staff pension fund a multiemployer funded defined benefit 
scheme and the wm pension scheme a defined contribution scheme the company is unable to identify its share of the 
underlying assets and liabilities of the multiemployer scheme on a consistent and reasonable basis and therefore has 
accounted for the scheme as if it were a defined contribution scheme under the requirements of frs 17 ‘retirement benefits’ 
contributions to this scheme are determined by independent professionally qualified actuaries the details of the latest actuarial 
valuation are detailed in note 34 to the consolidated accounts 
the total pension charge for the year including contributions to the defined benefit scheme above the normal charge amounted 
to £59m 2010 £35m 
 
share 
 capital  
£m 
share 
premium 
£m 
capital 
redemption 
reserve 
£m 
own 
shares 
£m 
profit and 
 loss account  
£m 
total 
£m 
at 1 january 2011 256 5327 02 141 914 6358 
shares purchased  – – – 27 – 27
shares utilised – – – 28 28 – 
sharebased payments – – – – 29 29 
profit for the year – – – – 847 847 
dividends – – – – 458 458
at 31 december 2011  256 5327 02 140 1304 6749 
 
share 
 capital  
£m 
share 
premium 
£m 
capital 
redemption 
reserve 
£m 
own 
shares 
£m 
profit and 
 loss account  
£m 
total 
£m 
at 1 january 2010  256 5332 02 146 191 5635 
costs of rights issue – 05 – – – 05
shares purchased  – – – 17 – 17
shares utilised – – – 22 22 – 
sharebased payments – – – – 39 39 
profit for the year – – – – 706 706 
at 31 december 2010  256 5327 02 141 914 6358 
continued   
 
147
financial statements 
notes to the company accounts 
17 sharebased payment  
during the year ended 31 december 2011 the company had the following sharebased payment arrangements which are 
described in note 7b to the consolidated accounts  
for the following disclosure share options with a nil exercise price have been disclosed separately to avoid distorting the 
weighted average exercise prices the number of share options in existence during the year was as follows 
1
 included within this balance are options over nil 2010 5774 shares for which no expense has been recognised in accordance with the transitional 
provisions of frs 20 as the options were granted before 7 november 2002 although there has been subsequent modification to the options no 
frs 20 charge has been recognised as the amounts are not material 
there were no options outstanding at 31 december 2011 options in 2010 had exercise prices that were between 207p and 
568p excluding options with a nil exercise price the range of exercise prices for options was as follows 
the options have a weighted average contractual life of one year 2010 one year options were exercised throughout the year 
and the weighted average share price at exercise was 244p 2010 232p 
  2011  2010 
 
number 
of share 
options 
weighted 
average  
exercise price  
p 
number  
of share  
options 
weighted
average 
exercise price
p
options without a nil exercise price     
at 1 january  26724 386 30759 376 
forfeited during the year  16544 339 1600 479 
group transfers during the year  12511 474 – – 
exercised during the year  – – 2435 210 
expired during the year 7656 448 – – 
outstanding at 31 december
1
 15035 479 26724 386 
exercisable at 31 december  – – 20045 357 
options with a nil exercise price 
  
  
at 1 january  3115965 nil 1897258 nil 
granted during the year  2103653 nil 1651323 nil 
forfeited during the year 595456 nil 20936 nil 
group transfers during the year 220151 nil – nil 
exercised during the year  597633 nil 327295 nil 
expired during the year 427203 nil 84385 nil 
outstanding at 31 december  3819477 nil 3115965 nil 
exercisable at 31 december  444461  –  
total outstanding at 31 december  3834512  3142689  
total exercisable at 31 december  444461  20045  
exercise price p  2011  2010 
0–300 – 6142 
300600 15035 20582 
 15035 26724  notes to the company accounts  
ontinued 
 
148
17 sharebased payment continued 
the weighted average fair value of the remaining share options granted during the year was calculated using a stochastic model 
with the following assumptions and inputs 
experience to date has shown that approximately 24 2010 15 of options are exercised early principally due to leavers  
this has been incorporated into the calculation of the expected option life for the share options without nil exercise price  
expected volatility in the table above was determined from historic volatility over the last nine years adjusted for oneoff  
events that were not considered to be reflective of the volatility of the share price going forward the expected dividend  
yield represents the dividends declared in the 12 months preceding the date of the grant divided by the average share price  
in the month preceding the date of the grant  
for share options granted during the year under the ltip the tsr targets have been reflected in the calculation of the fair  
value of the options above  
 share options with nil exercise price 
  2011   2010 
risk free interest rate  130144 1830 
expected volatility  515516 527 
peer group volatility  551570 496508 
expected option life in years  3 years 3 years 
expected dividend yield  347364 0 
weighted average share price at grant date 244p 229p 
weighted average exercise price at grant date nil nil 
weighted average fair value of options at grant date 144p 202p 
c  
 
149
financial statements 
notes to the company accounts 
18 commitments and contingencies  
operating lease commitments  
the company has entered into operating leases on certain properties annual commitments under noncancellable operating 
leases are as follows 
contingent liabilities  
a guarantees  
the company has guaranteed credit facilities totalling £156m 2010 £129m of certain subsidiaries  
b bonds and letters of credit  
in the ordinary course of business the group is required to issue counterindemnities in support of its operations as at 
31 december 2011 there were uk rail performance bonds of £258m 2010 £258m and uk rail season ticket bonds of 
£923m 2010 £850m the group has other performance bonds which include the £90m 2010 £179m performance bond  
in respect of intercapital and regional rail limited a performance bond with birmingham city council relating to the building of 
the new coach station of £02m 2010 £nil performance bonds in respect of businesses in the us of £1081m 2010 £1002m 
and the rest of europe of £233m 2010 £256m letters of credit have been issued to support insurance retentions of £308m 
2010 £394m 
19 related party transactions  
the company has taken advantage of the exemption in paragraph 3c of frs 8 ‘related party disclosures’ from disclosing 
transactions with wholly owned subsidiaries  
20 post balance sheet events 
there were no post balance sheet events 
 
 land and buildings 
 
2011  
£m 
2010 
£m 
operating leases which expire   
within one year 01 01 
within two to five years  03 03  shareholder information
shareholder electronic communications
by registering for electronic communications you can help us to reduce print paper and postage costs log on to wwwshareviewcouk 
if you would like to
•	 register your email so that you are able to access future shareholder information including the annual report and accounts 
electronically
•	 check the balance of your shareholding
•	 set up a dividend mandate online
•	 change your registered postal address or your dividend mandate details
•	 submit your vote online prior to a general meeting
to sign up for the first time you should click on ‘register’ and follow the simple instructions – you will need your shareholder reference 
number from your share certificate or dividend voucher or any other correspondence sent to you by equiniti limited
dividends paid direct to your bank account
having dividends paid direct to your bank account has the following advantages
•	 avoids the risk of cheques being lost and incurring a replacement fee
•	 saves you time in presenting the cheque for payment
•	 the dividend is credited to your account on the payment date
the tax voucher is sent to your registered address at the same time as the dividend is credited to your account to set up a new dividend 
mandate please log on to wwwshareviewcouk or contact the registrar equiniti limited aspect house spencer road lancing west 
sussex bn99 6da shareholder helpline number 0871 384 2152 or 44 121 415 7047 from overseas
 calls to this number cost 8p per minute from a bt landline other providers’ costs may vary lines open 830am to 530pm monday to friday
share dealing service
a telephone and internet share dealing service which provides a simple way to buy and sell shares is available through our  
registrar equiniti for further information log on to wwwshareviewcoukdealing or telephone 0845 603 7037 or 44 121 415 7560 
from overseas
 calls to this number are charged by bt at the local rate
company website
the company website at wwwnationalexpressgroupcom has information about the group including press releases share price data 
and copies of the half year results and annual report and accounts as well as corporate responsibility reporting the company no longer 
publishes the half year results in hard copy these will now only be available via the website
sharegift
sharegift is an independent charity share donation scheme administered by the orr mackintosh foundation registered charity number 
1052686 those shareholders who hold only a small number of shares the value of which makes it uneconomic to sell them can 
donate the shares to sharegift who will sell them and donate the proceeds to a wide range of charities further information about 
sharegift can be obtained from its website at wwwsharegiftorg and a sharegift transfer form can be downloaded from www
nationalexpressgroupcom
unclaimed assets register
the company participates in the unclaimed assets register “uar” which provides a search facility for shareholdings and  
other financial assets that may have been forgotten for further information contact uar po box 9501 nottingham ng80 1wd 
tel 0870 241 1713 or visit wwwuarcouk
150 dividends and financial calendar
final dividend ex dividend date 25 april 2012
final dividend record date 27 april 2012
annual general meeting 10 may 2012
final dividend payment date 18 may 2012
half year results announced 26 july 2012
interim dividend ex dividend date 5 september 2012
interim dividend record date 7 september 2012
interim dividend payment date 21 september 2012
151
financial statements
dividends and financial calendar corporate information
secretary and registered office 
michael hampson
national express group plc 
birmingham coach station 
mill lane 
birmingham  
b5 6dd 
tel 44 08450 130130 
fax 44 0121 666 6498
wwwnationalexpressgroupcom
registered number
2590560
auditor
deloitte llp
four brindley place 
birmingham 
b1 2hz
registrar
equiniti limited
aspect house 
spencer road 
lancing 
west sussex 
bn99 6da
shareholder helpline 0871 384 2152  
or 44 121 415 7047 from overseas
  calls to this number cost 8p per minute from a bt landline other telephone 
providers’ costs may vary lines open 830am to 530pm monday to friday
principal banker
hsbc bank plc
8 canada square 
london 
e14 5hq
corporate solicitors
ashurst llp
broadwalk house 
5 appold street 
london 
ec2a 2ha
financial advisors
merrill lynch international
2 king edward street 
london 
ec1a 1hq
stockbrokers
merrill lynch international 
2 king edward street 
london 
ec1a 1hq
morgan stanley
25 cabot square 
canary wharf 
london 
e14 4qa
152 glossary
bps basis points
bsog bus service operators grant
code the uk corporate governance code published by the financial reporting council in june 2010
cpi consumer price index
csog coach service operators grant
the company national express group plc
dft department for transport
ebt employee benefit trust
ebit earnings before interest and tax
ebitda is ‘earnings before interest and tax plus depreciation and amortisation’  it is calculated by taking 
normalised operating profit and adding depreciation fixed asset grant amortisation normalised profit  
on disposal of noncurrent assets and sharebased payments 
efqm european foundation for quality management
eps earnings per share – the profit for the year attributable to shareholders divided by the weighted average 
number of shares in issue excluding those held by the employee benefit trust and shares held in 
treasury which are treated as cancelled
etr effective tax rate
eu european union
euribor euro interbank offered rate
gearing ratio for debt financing purposes is calculated as net debt adjusted to reflect any cash which is restricted  
in use divided by ebitda
the group the company and its subsidiaries
hmrc her majesty’s revenue and customs
ias international accounting standards
ifric international financial reporting interpretations committee
ifrs international financial reporting standards
kpi key performance indicator
lcr london and continental railway ltd
libor london interbank offered rate
ltip long term incentive plan
napf national association of pension funds
net capital expenditure is the increase in net debt arising on the purchase of property plant and equipment and intangible assets 
less proceeds from disposals of property plant and equipment it excludes capital expenditure arising 
from uk rail franchise entry and exits and discontinued operations which are included in these headings 
growth capital expenditure is calculated as investment in fleet for new contracts and concessions 
after deducting fleet released from contracts and concessions lost and fleet reused in new contracts 
and concessions
153
financial statements
glossary net debt is defined as cash and cash equivalents cash overnight deposits other shortterm deposits and other 
debt receivables offset by borrowings loan notes bank loans and finance lease obligations and other 
debt payable 
net interest expense is finance costs less finance income 
nxea national express east anglia
normalised diluted 
earnings per share 
earnings per share excluding the profit or loss on sale of businesses exceptional profit or loss  
on the disposal of non current assets intangible asset amortisation exceptional items and tax  
relief on qualifying exceptional items
normalised operating 
profit
are the statutory results excluding profit or loss on the sale of businesses exceptional profit or loss on 
sale of noncurrent assets intangible asset amortisation exceptional items and tax relief thereon for 
continuing operations the board believes that the normalised operating profit gives a better indication  
of the underlying performance of the group
normalised profit margin is normalised profit divided by revenue expressed as a percentage
normalised results are defined as the statutory results before the following as appropriate profit or loss on the sale  
of businesses exceptional profit or loss on the disposal of noncurrent assets intangible asset 
amortisation exceptional items and tax relief on qualifying exceptional items
operating cash flow is intended to be the cash flow equivalent to normalised operating profit operating cash flow is 
normalised operating profit plus depreciation movements in working capital and proceeds from 
disposals of property plant and equipment less finance lease additions purchase of property plant  
and equipment and purchase of intangible assets 
rcf revolving credit facility
return on capital 
employed roce
is normalised operating profit divided by the sum of net assets and net debt
return on equity is normalised profit after tax less the posttax amortisation of intangible assets divided by  
shareholders’ equity
return on tangible assets is normalised operating profit dividend by the sum of net assets excluding intangible assets and net debt
rps railway pension scheme
rrev research recommendation and electronic voting – a corporate governance advisory service
spad signal passed at danger
tfl transport for london
underlying revenue compares the current year with the prior year on a consistent basis after adjusting for the impact  
of currency acquisitions disposals and rail franchises no longer operated
toc train operating company
tsr total shareholder return – the growth in value of a shareholding over a specified period assuming  
that dividends are reinvested to purchase additional shares
uk gaap uk generally accepted accounting principles
ulsd ultra low sulphur diesel
glossary continued
154 notes
155
financial statements cautionary statement
this business review is intended to focus on matters which are 
relevant to the interests of shareholders of the company the 
purpose of this review is to assist shareholders in assessing the 
strategies adopted and performance delivered by the company 
and the potential for those strategies to succeed it should not  
be relied on by any other party or for any other purpose 
forward looking statements are made in good faith based  
on a number of assumptions concerning future events and 
information available to directors at the time of their approval  
of this report these forward looking statements should be treated 
with caution due to the inherent uncertainties underlying any 
such forward looking information the user of these accounts 
should not rely unduly on these forward looking statements 
which are not a guarantee of performance and which are subject 
to a number of uncertainties and other facts many of which are 
outside the company’s control and could cause actual events 
to differ materially from those in these statements no guarantee 
can be given of future results levels of activity performance 
or achievements 
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156 five year summary 
 
157
financial statements 
five year summary 
 normalised results are defined as the statutory results before the following as appropriate profit or loss on sale of businesses exceptional profit or 
loss on sale of noncurrent assets intangible amortisation property plant and equipment impairments exceptional items and tax relief on qualifying 
exceptional items 
 normailised operating profitcapital employed 
1
 prior year earnings per share figures have been restated for the effect of the 2009 rights issue 
year ended 31 december 
2011
 £m 
 
2010
 £m 
2009
 £m 
 
2008 
 £m 
2007
 £m 
revenue  22380 21259 27111 27670  26123 
normalised operating profit  2252 2042 1598 2539  2104 
group operating profitloss 1744 859 06 1678  1617 
profitloss before tax  1294 402 835 1099  1493 
statistics     
basic earningsloss per share
1 
199p 120p 176p 404p  359p 
normalised diluted earnings per share
1 
269p 235p 304p 486p  436p 
dividends per share – declared 950p 600p – 2272p  3796p 
net debtfunds      
cash at bank and in hand  925 1288 1058 1059  1572 
other debt receivable  07 07 08 09  – 
loan notes  – – – 08  08
bonds 5834 5656 – – – 
bank and other loans 79 398 6877  11508  9474
fair value of bond hedging derivatives 164 11 – – – 
finance lease obligations 1513 1316 756  1339  1198
other debt payable  07 18 12 11  – 
net debt 6337 6104 6579 11798  9108 
net assets  9654 9398 8423 5854  4370 
capital employed 15991 15502 15002 17652 13478 
return on capital pretax 141 132 107 144 156 
return on equity      
normalised profit for the year 1387 1213 932 1446 1289 
intangible amortisation post tax 361 400 406 395  221 
posttax return before exceptional items and 
discontinued operations 1026 813 526 1051 1068 
total equity 9654 9398 8423 5854 4370 
return on equity before exceptional items and 
discontinued operations posttax 106 87 62 180 244  national express group plc
national express house
mill lane
digbeth
birmingham b5 6dd
tel 44 0 8450 130130
wwwnationalexpressgroupcom  national express group plc annual report and accounts 2011


Summary:
 overview
chairman’s letter
dear shareholder 
i am delighted to report that in 201 1 national express 
has delivered another successful year of business 
turnaround and improvement 
i am delighted to report that in 201 1 
national express has delivered another 
successful year of business turnaround 
and improvement we have now 
completed the process of recreating a 
high quality business building on the 
foundations that we put in place in 2010 
and delivering both improved profitability 
and strong revenue growth national 
express is now the best performing private 
provider of mass transportation in many  
of the markets in which it operates 
201 1 has been a record year for group 
statutory profit before tax and amortisation 
back in 2009 when i joined as chairman 
the group was struggling for its business 
survival however we reduced our debt 
resolved the losses in our east coast rail 
franchise maintained our independence 
and with strong shareholder support put 
in place an appropriate capital structure 
since his arrival in february 2010 dean 
finch has created a new leadership team 
which has turned the business around 
delivering effective operational control 
driving out excess cost and helping to 
refinance the group’s debt 201 1 has 
seen further margin improvement organic 
growth supported by acquisition and the 
identification of future growth opportunities 
2012 is likely to present difficult economic 
challenges but we have created a platform 
from which to grow both organically and 
through acquisition highlighted by our 
decision to acquire petermann partners 
inc which is due to complete during the 
first half of the year
with our turnaround complete we are 
now implementing the next stage of our 
strategy to continue to improve margin in 
our existing businesses to take advantage 
of the growth opportunities in our current 
markets and to identify and develop 
exciting new market potential it will be 
delivered by a management team that  
has proven credentials in every area of  
our operations and we will strengthen the 
team further to ensure that we have the 
skills to deliver each aspect of our strategy 
our vision for the group is to put our 
customers first to a level that will clearly 
differentiate national express in the mass 
transport market
during the first half of 201 1 the board 
took steps to further enhance its skills 
and experience particularly recognising 
the group’s future growth plans for north 
america and continental europe i was 
very pleased to welcome chris muntwyler 
joaquín ayuso and lee sander to the 
board each with credentials in our target 
markets since their appointment  
they have given valuable insight into  
these growth areas as well as helping  
to manage the risks and opportunities  
in our existing markets 
in recognition of the group’s sound 
financial footing and improved earnings 
we restored the dividend last year with 
a final payment for 2010 of 6 pence 
per share we set out a policy that the 
board considers both sustainable and 
progressive in this prolonged period of 
economic uncertainty – we will aim for our 
dividend to be at least two times covered 
by nonrail earnings and fully funded by our 
free cash flow across the medium term 
at the same time we reiterated our debt 
policy to target a gearing ratio of between 
two and two and a half times earnings 
before interest tax depreciation and 
amortisation ebitda 
we remain committed to these core 
policies which provide shareholders with 
a suitable balance of longterm growing 
returns whilst retaining sufficient resource 
in the group to explore opportunities to 
grow shareholder value following  
payment of our interim 201 1 dividend  
of 3 pence per share in september i am 
pleased to announce a recommended final 
dividend for 201 1 of 65 pence per share 
an increase of 83 taking the full year 
payment to 95 pence per share this will 
be paid from the 203 pence of nonrail 
earnings per share eps delivered in 201 1 
and the £844 million of free cash flow we 
generated in the year both of which we 
expect to grow in future years
during 201 1 our employees have 
continued to play a major part in the 
implementation of our strategy adopting 
our vision and values with particular 
focus on improvements to customer 
service and in the promotion of a culture 
of safety across the group on behalf of 
the board i would like to thank them for 
the commitment and enthusiasm that they 
have shown as we move into the next 
phase of our development
john devaney
chairman
29 february 2012
for more information on corporate 
governance and our board of directors 
please go to nationalexpressgroup
comar2011
john devaney
2