Concordia Bus Ab Publ 6-K Current report (foreign)

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the fiscal fourth quarter December 1, 2003 - February 29, 2004

Concordia Bus AB (publ)

(Translation of registrant’s name into English)

Solna Strandvag 78, 17154 Solna, Sweden

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ý Form 40-F o

Indicate by check mark whether the registrant files by furnishing the information contained in this Form is also thereby furnishing the Information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o ý

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b); 82-          .

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Concordia Bus AB (publ)
	(Registrant)
Date: April 28, 2004	By:	/s/ Vasant Mistry
		Vasant Mistry
		Chief Financial Officer

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CONCORDIA BUS AB

STOCKHOLM, SWEDEN

FOURTH QUARTER AND FULL YEAR REPORT

MARCH 1, 2003 – FEBRUARY 29, 2004

The matters discussed in this news release include forward-looking statements that are subject to risks and uncertainties including but not limited to economic conditions, product demand, competitive products and services, government regulation, financial resources, certain litigation and other risks indicated in filings with the US Securities and Exchange commission.

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INDEX

Operational and Financial Review

Unaudited Consolidated financial statements – Concordia Bus AB (publ) and subsidiaries

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CONCORDIA BUS AB (PUBL)

FOURTH QUARTER AND FULL YEAR REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Concordia Bus AB (“Concordia” or the “Company”) hereby submits the financial statements for the year ended February 29, 2004. The Company is a wholly owned subsidiary of Concordia Bus Holding AB (Reg. No. 556574-8240, domiciled in Stockholm), which is a part of the group of which Concordia Bus BV (Reg. No. 103040697, Dos No. 292558KvK, domiciled in Amsterdam, The Netherlands) is the ultimate parent company. All figures are expressed in millions of SEK if not otherwise indicated.

You should read the following discussion in conjunction with the financial statements of Concordia included in this quarterly report starting on page 10. The financial statements of Concordia are prepared in accordance with accounting principles generally accepted in Sweden (“Swedish GAAP”), which differ in various respects from accounting principles generally accepted in the United States (“U.S. GAAP”). The financial year-end for Concordia is the last day of February. Unless otherwise specified in this discussion, reference to a particular year is to the financial year ended the last day of February of that year (“fiscal 2004” for the year ended February 29, 2004). The end of the third financial quarter for Concordia is November 30 of each year.

The same accounting policies and methods of computation are followed in the quarterly consolidated financial statements as compared with the most recent annual financial statements.

The discussion that follows compares our actual results for 2004 with our restated results for 2003.

Financial Highlights

The following table summarizes Concordia’s results of operations for the periods indicated in terms of amounts as well as a percentage of revenues:

Fourth quarter ended February 29, 2004 compared to the fourth quarter ended February 28, 2003

	2004				2003 Reported				2003 Restated
	SEK million		%		SEK million		%		SEK million		%
Revenues	1,203		100.0	%	1,189		100.0	%	1,189		100.0	%
Operating profit/(loss)	(129	)	(10.7	)%	(152	)	(12.8	)%	(139	)	(11.7	)%
EBITDAR(1)	62		5.1	%	66		5.6	%	79		6.6	%
EBITDAR before exceptional items (2)	116		9.6	%	123		10.3	%	113		9.5	%
Net profit/(loss)	(272	)	(22.6	)%	(185	)	(15.6	)%	(172	)	(14.4	)%

Year ended February 29, 2004 compared to Year ended February 28, 2003

	2004				2003 Reported				2003 Restated
	SEK million		%		SEK million		%		SEK million		%
Revenues	4,762		100.0	%	4,758		100.0	%	4,758		100.0	%
Operating profit/(loss)	(155	)	(3.2	)%	(172	)	(3.6	)%	(172	)	(3.6	)%
EBITDAR(1)	596		12.5	%	582		12.2	%	582		12.2	%
EBITDAR before exceptional items (2)	650		13.6	%	696		14.6	%	696		14.6	%
Net loss	(409	)	(8.6	)%	(344	)	(7.2	)%	(344	)	(7.2	)%

(1)EBITDAR is defined as net income before interest, taxes, depreciation, amortization and rent expense (primarily lease payments on buses and on sale lease back transactions, EBITDAR is not a measure of financial performance under generally accepted accounting principles and should not be considered as an alternative to United States GAAP or Swedish GAAP measures of Net loss or as an indicator of Concordia’s operating performance or cash flows from operations under United States GAAP or Swedish GAAP or as a measure of liquidity. It should be noted that EBITDAR is not a uniform or standardized measure and the calculation of EBITDAR may vary significantly from company to company and by

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itself provides no grounds for comparison of Concordia with other companies. EBITDAR has been derived from amounts found under “Consolidated statement of operations” on Page 10 and 11 of this quarterly report, prepared under Swedish GAAP.

(2)Exceptional items are those, which the management believes, are non-recurring and have a non-operational nature and are necessary to explain the development of operating performance. These may not meet Swedish or US GAAP definitions of exceptional and extraordinary items.  See Note 2.

Fourth quarter ended February 29, 2004 compared to the Fourth quarter ended February 28, 2003

The following section provides an analysis between the actual numbers presented for the quarter as compared with the equivalent period in the preceding year. The discussion compares our results for 2004 with our restated results for 2003.

Revenues

Revenues principally comprise fees generated from bus services provided under the terms of contracts with local public transportation authorities in Sweden, Norway and Finland and from express bus services and coach hire services in Sweden. Revenues also include revenues received from maintenance and repair services that Swebus provides at its depots to third parties and sales of diesel fuel.

Revenues increased by SEK 14 million, or 1%, from SEK 1,189 million for the three months ended February 28, 2003 to SEK 1,203 million for the quarter ended February 29, 2004. Revenues from the provision of bus services for local public transportation authorities increased by SEK 12 million, or 0.5%, from SEK 1,068 million for the three months ended February 28, 2003 to SEK 1,080 million for the three months ended February 29, 2004.

The SEK 12 million increase was derived largely from new contracts worth SEK 59 million and a compensation due to prior years of SEK 37 million. This was offset by lost contracts of SEK 83 million with the remaining decrease of SEK 1 million resulting from a combination of a volume decrease, price increase upon renewal of contracts, increase from the indexation adjustments and other changes in existing contracts.

Revenues from express bus services increased by SEK 10 million, or 14%, from SEK 71 million for the three months ended February 28, 2003 to SEK 81 million for the three months ended February 29, 2004. The revenue increase derives primarily from general price increase of 4% effective from July 1, 2003and increase in passengers carried.

Revenues from coach hire services declined by SEK 4 million or 12% from SEK 25 million for the three months ended February 28, 2003 to SEK 21 million for the three months ended February 29, 2004. The revenue decline is a direct reflection of a lower level of business activities and decreased tourism.

Other revenues amounted to SEK 21 million for the quarter ended February 29, 2004 and SEK 28 million for the three months ended February 28, 2003. Other revenues largely consist of sales of diesel fuel and maintenance and repair services to third parties.

Gain on Sale of Fixed Assets

The net gain on sale of fixed assets is comprised of sales of buses and other assets held by Concordia. Gain on sale of fixed assets was SEK 1 million for the three months ended February 29, 2004, compared to a gain on sale of fixed assets of SEK 0.4 million for the three months ended February 28, 2003. Numbers of buses sold during the quarter were 70 units on which we realized SEK 6 million in cash.

Operating Costs

Operating costs consist primarily of personnel costs (which includes wages, salaries, social security fees and pension costs of bus drivers, mechanics and other employees), fuel, tires and other consumables costs, and other external costs, which include depot costs and head office administrative costs. Operating costs also consist of operating lease charges. Operating costs increased by SEK 30 million, or 3%, from SEK 1,213 million for the three months ended February 28, 2003 to SEK 1,243 million for the three months ended February 29, 2004. This increase is due to a number of factors, which are explained below.

Additional factors

Fuel, tires and other consumable costs decreased by SEK 2 million or 1%, to SEK 248 million for the three months ended February 29, 2004 from SEK 250 million for the three months ended February 28, 2003. The reduction was due to lower

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diesel costs. The average price of diesel was 1.8% lower versus the corresponding period previous year.  Othe costs such as maintenance costs were stable during the periods.

Personnel costs increased by SEK 14 million to SEK 679 million, for the three months ended February 29, 2004 from SEK 665 million for the three months ended February 28, 2003. This increase resulted from a pay increase of 5.98 %, resulting in higher staff costs of SEK 52 million, costs for bonuses of SEK 4 million and higher pension premiums of SEK 8 million. In addition, new contracts added SEK XX million of wage costs. These increaees were offset by reduction in wage costs due to loss of contracts SEK XX million and productivity gains of SEK XX million.

Other external costs increased by SEK 21 million, to SEK 215 million for the three months ended February 29, 2004 from SEK 194 million for the three months ended February 28, 2003. This was primarily due to increase in the provision for future loss on certain contracts contracts of SEK 60 million , provision of SEK 6 million for termination costs at depots in Göthenburg due to the loss of contract. This was partially offset by reuction in net decrease in operational costs due to lost contracts SEK 33 million, reduced energy costs of SEK 2 million and reduced operational costs of SEK 10 million.

Operating lease charges decreased by SEK 2 million to SEK 101 million for the three months ended February 29, 2004 from SEK 103 million for the three months ended February 28, 2003. This decrease was principally a result of lower interest rate resulting in a decreased cost of SEK 3.9 million. This is offset by an increased number of buses under operating lease which increased the operating lease charges by SEK 1.4 million. The total number of buses under operating leases was 1,317 as of February 29, 2004, compared to 1,156 as of February 28, 2003 and compared to 1301 as of November 30, 2003.

Depreciation and Amortization

Depreciation and amortization charges comprise principally depreciation of buses and other vehicles but also relate to depreciation of tools, fixtures and fittings, buildings and computer equipment. In addition, amortization of goodwill resulting from acquisitions of bus operations is included. Depreciation and amortization costs decreased by SEK 25 million from SEK 115 million for the three months ended February 28, 2003 to SEK 90 million for three months ended February 29, 2004, principally as a result of a reduction in the number of buses in the fleet that we own. The total number of buses we owned was 2,563 as of February 29, 2004, compared to 2,793 as of February 28, 2003. Total goodwill amortization was SEK 11 million for both periods.

Operating loss

Operating loss decreased by SEK 10 million from a loss of SEK 139 million for the three months ended February 28, 2003 to a loss of SEK 129 million for the three months ended February 29, 2004.

Operating loss from bus operations for public authorities increased by SEK 10 million from an operating loss of SEK 103 million for the three months ended February 28, 2003, to an operating loss of SEK 114 million for the three months ended February 29, 2004. Operating profit from express bus services was SEK 4 million for the three months ended February 29, 2004 compared to an operating profit of SEK 3 million for the three months ended February 28, 2003. Operating loss from coach hire services was SEK 2 for the three months ended February 29, 2004, compared to operating loss of SEK 1 million for the three months ended February 28, 2003. Head office items and other decreased by SEK 21 million from SEK 27 million for the three months ended February 28, 2003, to SEK 6 million for the three months ended February 29, 2004.

Financial Income and Expenses

Financial income and expenses includes interest income from cash and cash equivalents and interest expense from bank loans and other financial indebtedness. Financial income and expenses increased by SEK 79 million to net financial expenses of SEK 148 million for the three months ended February 29, 2004, compared to net financial expenses of SEK 69 million for the three months ended February 28, 2003. The interest expense increased by SEK 24 million to SEK 80 million for the three months ended February 29, 2004 from SEK 56 million for the three months ended February 28, 2003. The main reason is the refinancing of syndicated loans with secured senior notes at 9.125% and termination of our euro interest hedges of SEK 14 million. In the process we improved or liquidity position by approximately SEK 150 million and increased borrwoing by the same amount. Total foreign exchange loss increased by SEK 32 million from a loss of SEK 9 million for the three months ended February 28, 2003, to a loss of SEK 41 million for the three months ended February 29, 2004. Also amortization of capitalised financing costs have increased, from SEK 4 million for the three months ended February 28, 2003 to SEK 27 million for the three months ended February 29, 2004. This is due to a one-off write-down of capitalised financing costs connected to the old senior debt loan.

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Taxes

The standard rate of taxation in Sweden is 28%. Concordia Bus has not paid any taxes for the period ended February 29, 2004. The effective tax rate for the three months ended February 29, 2004 was 11%. The difference to the tax rate is due to amortization of goodwill (11%) and valuation allowance of net-operating losses (6)%.

Year ended February 29, 2004 compared to Year ended February 28, 2003

The following section provides an analysis of our results of operations between the actual numbers for the year ended February 29, 2004 as compared with the year ended February 28, 2003. The discussion compares our actual results for 2003 with our restated results for 2002.

Revenues

Revenues increased SEK 3 million or 0.1%  from SEK 4,758 million for the year ended February 28, 2003 to SEK 4,761 million for the year ended February 29, 2004.

Revenues from the provision of bus services for local public transportation authorities decreased by SEK 29 million, or 7%, from SEK 4,243 million for the year ended February 28, 2003 to SEK 4,214 million for the year ended February 29, 2004.

The SEK 29 million decrease is due to lost contracts worth of SEK 270 million. This was partly offset by new contracts worth of SEK 165 million and an index compensation due from prior years of SEK 37 million. The remaining increase of SEK 39 million is due to a combination of a volume and price movements upon renewal of contracts, increase from indexation adjustments and changes in existing contracts.

Revenues from express bus services increased by SEK 33 million, or 11%, from SEK 295 million for the year ended February 28, 2003 to SEK 328 million for the year ended February 29, 2004. The revenue increase derives primarily from an increase of number of passengers carried, from 2,7 million passengers year ended February, 28 2003 to 3,0 million passengers year ended February 29, 2004 and from a price increase of 4% effective from July 1, 2003.

Revenues from coach hire services declined by SEK 17 million, or 13%, from SEK 127 million for the year ended February 28, 2003 to SEK 110 million for the year ended February 29, 2004. The revenue decline is a direct reflection of a lower level of business activities and decreased tourism, mainly due to the general recession in the economy.

Other revenues increased by SEK 17 million from SEK 93 million for the year ended February 28, 2003 to SEK 110 million for the year ended February 29, 2004. The increase was largely a result of one-off compensation for the driver relief breaks introduced in Stockholm region.

During the year ended February 29, 2004, revenues of SEK 3,986 million were generated in Sweden, revenues of SEK 379 million were generated in Norway, and revenues of SEK 396 million were generated in Finland. During the year ended February 28, 2003, revenues of SEK 3,902 million were generated in Sweden, revenues of SEK 457 million were generated in Norway, and revenues of SEK 399 million were generated in Finland.

Gain on Sale of Fixed Assets

Gain on sale of fixed assets is comprised of sales of buses and other assets. Gain on sale of fixed assets increased from a loss of SEK 4 million for the year ended February 28, 2003 to a gain of SEK 6 million for the year ended February 29, 2004.

Operating Costs

Operating costs consist primarily of personnel costs (which includes wages, salaries, social security fees and pension costs of bus drivers, mechanics and other employees), fuel, tires and other consumables costs, and other external costs, which include depot costs and head office administrative costs. Operating costs also include operating lease charges. Operating costs increased by SEK 35 million, or 0,8%, at SEK 4,522 million for the year ended February 28, 2003 compare to SEK 4,557 million for the year ended February 29, 2004. The increase of SEK 35 million is due to a number of factors, which are outlined below.

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Additional details on Operating Costs:

Fuel, tires and other consumable costs have increased by SEK 11 million or 2% to SEK 930 million for the year ended February 29, 2004 from SEK 919 million for the year ended February 28, 2003. The increase is largely due to a high diesel price during the first quarter resulting in increased costs by SEK 14 million and higher maintenance costs in the first quarter of SEK 10 million. This has been offset by the lower volumes as a result of lost contracts, which resulted overall in a lower cost of SEK 13 million.

Personnel costs have increased by SEK 13 million, or 0,5%, from SEK 2,597 for the year ended February 28, 2003 to SEK 2,610 for the year ended February 29, 2004.

The increase of SEK 13 million is due to a reduction of drivers in our lost contracts resulting in lower wage costs of SEK 66 million, productivity gains in Stockholm of SEK 16 million and other reductions of SEK 4 million. This was offset by an effective pay increase of 3.8% in resulting in higher wage costs of SEK 47 million and higher pension premiums of SEK 11 million. In addition, the need for extra drivers in Stockholm due to the new legislation regarding relief breaks has resulted in increased wage costs of SEK 27 million.During the fourth quarter, personell costs have increased by SEK 14 million due to new contracts (Skaraborg).

Operating lease charges increased by SEK 38 million, or 16%, from SEK 350 for the year ended February 28, 2003 to SEK 388 for the year ended February 29, 2004. This increase was principally a result of our increased use of operating leases for buses. The total number of buses under operating leases was 1,317 as of February 29, 2004, compared to 1,156 as of February 28, 2003.

Other external costs decreased by SEK 27 million to SEK 629 million for the year ended February 29, 2004 from SEK 656 million for the year ended February 28, 2003. The decrease was mainly due to a reduction of subcontractors of SEK 38 million and decreased administration costs of SEK 7 million due to normalisation of Stockholm operations. This was partly offset by higher operational costs.

Depreciation and Amortization

Depreciation and amortization charges comprise principally the depreciation of buses and other vehicles but they also relate to the depreciation of tools, fixtures and fittings, buildings and computer equipment. In addition, amortization of goodwill resulting from acquisitions of bus operations is also included. Depreciation and amortization costs decreased by SEK 40 million, or 10%, from SEK 404 million for the year ended February 28, 2003 to SEK 364 million for the year ended February 29, 2004 principally as a result of the shift towards increased operational leasing of buses and away from ownership. Total goodwill amortization was SEK 44 million for the year ended February 29, 2004, which remained constant with the year ended February 28, 2003.

Operating loss

Operating loss was SEK 155 million for the year ended February 29, 2004, compared to an operating loss of SEK 172 million for the year ended February 28, 2003 due to overhead cost reductions and higher contribution from the new and renewed contracts.

Operating loss from bus operations for local public transportation authorities was SEK 64 million for the year ended February 29, 2004, compared to SEK 79 million for the year ended February 28, 2003, mainly due increased operating lease charges and provision for future losses.

Operating profit from express bus services remained the same at SEK  31 million for the year ended February 29, 2004 compared to the year ended February 28, 2003 . The increased revenues have been offset by higher costs for subcontracting.

Operating profit from coach hire services decreased from SEK 8 million for the year ended February 28, 2003, to SEK 4 million for the year ended February 29, 2004.

Head office costs and other items decreased from SEK 103 million for the year ended February 28, 2003, to SEK 66 million for the year ended February 29, 2004 due largely to termination compensation payments in the period to February 28, 2003 of SEK 7 million and overall reduction in professional charges and reduction in heads during the period to February 29, 2004

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Financial Income and Expenses

Financial income and expenses includes interest income from cash and cash equivalents and interest expense from loans made by banks and other financial indebtedness. Financial expenses increased by SEK 50 million from a financial expense of SEK 265 million for the year ended February 28, 2003 to SEK 315 million for the year ended February 29, 2004. The increase can be partly be explained by an increase of amortization of deferred financing costs by SEK 24 million due release of costs related to senior debt and the refinancing of syndicated loans with secured senior notes at 9.125% Our foreign exchange losses were also SEK 21 million higher compared to the year ended February 28, 2003.

Taxes

The standard rate of taxation in Sweden is 28%. Concordia Bus did not pay any taxes for the year ended February 29, 2004. The effective tax rate for the year ended February 29, 2004 was 26%. The difference to the tax rate is due to amortization of goodwill (5%) and an adjustment of deferred tax asset for tax loss carry-forward 4% and valuation allowance of net operating losses (1%).

Trend Information

During the year ended February 29, 2004, we have submitted tenders for 1,346 buses out of the 1,999 buses that were open for competitive tenders which included contracts for routes where we already operated 573 buses. Of these 1,346 units results for  1,318 units have been announced. We have retained 203 buses out of the 573 buses we operated. Lost units include our Gothenburg contract which was for 140 buses. In addition, we won a total of 354 units from our competitors. We currently await results on a further 28 units of which Concordia operates 16 units. We have prolonged our contracts in Karlstad for one year following court decision which upheld Concordia’s complaint.

We anticipate tenders for some 1,500 buses during the financial year ending February 28, 2005. Of which we have 250 or 36 % of the total buses in Sweden, 80 buses or 16% of the total in Norway and 158 or 53% of the total buses in Finland.

Notably we have 25 contracts expiring. These also cover loss making contracts in Vantaa and Sweden.

Indexation

Concordia receives cost increase compensation from CPTA at varying frequencies at stipulated indices in the contracts. In most recent contracts the weighting of various cost mix and the links to defined indices have improved however we continue to suffer from mismatch between our underlying cost base and weight of indices and mismatch of cost increases in related index development. During the year we have been undercomensated for our cost increases due to the above factors and in particular our wage costs have increased significantly. Whilst we have been conservative in our accounting the final indices of labour costs for 8 months period from July to February are not known. The development of Transport labour index where bus operators constitute 25% of the total wages remains uncertain.

Currently we are in the process of presenting a proposal to SLTF – CPTA association for a new structure covering correct weighting of cost elements as well as a specific Bus operator labour index developed by SCB – Swedish statistics beaureu. We remain optimistic that an appropriaret comensation mechanism will be established shortly between the two bodies and would become effective during the next 12 months.

Liquidity and Capital Resources

Concordia will require cash principally to repay indebtedness incurred in connection with financing its acquisition of Concordia Bus Nordic AB. Most of this indebtedness is comprised of the senior subordinated notes issued in January 2000 and senior secured notes issued in January 2004.

The outstanding amount of the senior subordinated notes as of February 29, 2004 was €160 million. These notes will mature on February 15, 2010 and carry a fixed interest rate of 11% per annum. Interest is paid on February 15 and August 15 of each year until maturity.

During January 2004 Concordia’s wholly owned subsidiary Concordia Bus Nordic AB refinanced its syndicated credit facilities with the issue of secured senior notes of  €130 million. The proceeds were used to repay senior credit facilities of the Group and increase liquidity poisition of the group. The senior secured notes will mature on August 1, 2009 and carry a fixed interest rate of 9,125% per annum. Interest is paid on February 1 and August 1 of each year until maturity. The first interest payment is falling due on August 1, 2004.

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As of February 29, 2004 Concordia had total net indebtedness of SEK 2,345 million after the deduction of cash balance of SEK 351 million. The interest expense for the twelve months ended February 29, 2004 was SEK 242 million.

We are currently undertaking a review of our interest rate FX exposure. Under the syndicated facilities we were required to hedge 50% of the senior interest payments for the next three years. We have hedges in place for 30 % of the total interest payable during the financial year ending February 28, 2005. In addition we have applied our hedges for SEK interest rates towards expsoure on the operating lease debt. We estimate approximately 8 % of the operating lease exposure is covered by interest caps and Swaps.

Net cash provided by operating activities was SEK 4 million for the year ended February 29, 2004, compared to SEK 11 million for the year ended February 28, 2003.

Investments in tangible fixed asset was was SEK 30 million for the year ended February 29, 2004, compared to SEK 253 million for the year ended February 28, 2003, when we had investments in connection with a start up of a large contract in Stockholm.

The restructuring of the fully owned subsidiary Concordia Bus Nordic has had an impact on the cash flow. During the year ended February 29, 2004, we had investments of capitalised financing costs of SEK 48 million. In connection with this we have repayments of the senior credit facilities of SEK 984 million including a foreign exchange loss of SEK 25 million. We have repaid financial lease debts by SEK 6 million.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed are:

•              Interest rates on debt;

•              Foreign exchange rates;

•              Fuel prices; and

•              Inflation.

The following risk management discussion and that the estimated amounts generated from analytical techniques are forward looking statements of the market risk assuming certain market conditions occur. Our actual results in the future may differ materially from these projected results due to actual developments in the global financial markets.

Interest Rates

We currently hedge our exposure to interest rate fluctuations on our lease debt through the use of derivative instruments. We have entered into Swedish Kronor interest rate swaps and caps to fix a portion of the interest part within the lease payments we make under the lease debt.

Based on the nominal value of the operational lease debt at February 29, 2004 of SEK 1,948 million, a 1% change in interest rates would increase lease charges by approximately SEK 19. 5 million per annum. Senior notes outstanding at February 29, 2004 with a carrying value of SEK 2,673 million have been excluded from the above interest rate sensitivity analysis because they bear a fixed rate of interest.

Foreign Exchange

We are also exposed to currency fluctuations on loans, primarily as a result of having to make interest payments in Euro on our senior note loans. We have entered into collar arrangements through the sale of puts and the purchase of calls with the same settlement dates. While this arrangement caps the amount of benefit we can obtain from an appreciation of the Swedish Kronor against the Euro, it also caps our potential increased interest costs through a depreciation of the Swedish Kronor against the Euro. Under the Secured noted we were required to hedge 50% of our future interest payments on the senior subordinated notes against adverse movements for us in the Swedish Kronor/Euro exchange rate. Our current exposure under the existing hedges which cover xx % of interest payments for the year ending February 28, 2005 for a 10% depreciation in the value of the Swedish Kronor against the Euro would increase our interest costs by approximately SEK 27,2 million per annum. See the subheading “Liquidity and Capital Resources” in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Fuel Prices

Concordia is also exposed to commodity price risk through its requirements for diesel fuel.  Diesel fuel is priced in the international commodity markets in US dollars. We purchase our diesel fuel requirements out of our operating revenue, which is largely denominated in Swedish Kronor. Therefore, we are exposed to currency fluctuation risk between the dollars and the Swedish Kronor. We currently have hedges in place to purchase portions of our diesel fuel at fixed SEK prices through February 28, 2005. We hedge only the non-tax portion of our diesel fuel costs. We estimate that a 10% depreciation in the value of the Swedish Kronor against the dollar would increase our diesel fuel costs by approximately SEK 7,5 million per annum.

Inflation

Inflation had no material impact on our operations during the year ended February 29, 2004. However, due to the nature of our contractual business where cost increases are compensated through movements in agreed indices (elements of total inflation) we are currently subject to under-compensation due to a mismatch between our industry costs and our relative level of compensation from the indices which the local transportation authorities use to compensate us. A 1% increase in inflation would have a positive benefit of approximately SEK 9 million per annum when compared to the previous year.

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CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE FOURTH QUARTER

(in millions of SEK except loss per share)	Note	December 1, 2003 - February 29, 2004		December 1, 2002 - February 28, 2003 Reported		December 1, 2002 - February 28, 2003 Restated*)
Net revenue	1	1,203		1,189		1,189
Fuel, tires and other consumables		(248	)	(250	)	(250	)
Personnel costs		(679	)	(666	)	(665	)
Other external costs		(215	)	(194	)	(194	)
Operating lease charges	5	(101	)	(103	)	(103	)
Depreciation and amortization		(90	)	(115	)	(115	)
Gain (Loss) on sale of fixed assets		1		(13	)
Operating loss	1,2	(129	)	(152	)	(139	)
Interest income		3		3		3
Interest expense and similar items	3	(151	)	(73	)	(73	)
Financial income and expenses		(148	)	(70	)	(69	)
Loss after financial items		(277	)	(222	)	(209	)
Taxes		5		37		37
Net loss for the period		(272	)	(185	)	(172	)
Number of shares		5,000		5,000		5,000
Loss per share (SEK)		(54,493	)	(36,919	)	(34,328	)

*) In fiscal 2003, we had initially booked our loss on our sale of fixed assets in the fourth quarter as an year-end adjustment. We have now restated this loss to report the loss in the period when the assets were sold. This restatement does not change our total operating loss figure for fiscal 2003.  It does impact the operating profit/(loss) figure on a quarterly basis, however, by increasing the loss (or reducing the profit) for each of the first three quarters of fiscal 2003.

The accompanying notes are an integral part of these Consolidated Interim Financial Statements

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CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE FULL YEAR

(in millions of SEK except loss per share)	Note	March 1, 2003 - February 29, 2004		March 1, 2002 - February 28, 2003 Reported		March 1, 2002 - February 28, 2003 Restated*)
Net revenue	1	4,761		4,758		4 758
Fuel, tires and other consumables		(930	)	(919	)	(919	)
Personnel costs		(2,610	)	(2,597	)	(2,597	)
Other external costs		(629	)	(656	)	(656	)
Operating lease charges	5	(388	)	(350	)	(350	)
Depreciation and amortization		(364	)	(404	)	(404	)
Gain (Loss) on sale of fixed assets		5		(4	)	(4	)
Operating loss	1,2	(155	)	(172	)	(172	)
Interest income		7		10		10
Interest expense and similar items	3	(315	)	(265	)	(265	)
Financial income and expenses		(308	)	(255	)	(255	)
Loss after financial items		(463	)	(427	)	(427	)
Taxes		54		83		83
Net loss for the period		(409	)	(344	)	(344	)
Number of shares		5,000		5,000		5,000
Loss per share (SEK)		(81,721	)	(68,780	)	(68,780	)

*) In fiscal 2003, we had initially booked our loss on our sale of fixed assets in the fourth quarter as a year-end adjustment. We have now restated this loss to report the loss in the period when the assets were sold. This restatement does not change our total operating loss figure for fiscal 2003.  It does impact the operating profit/(loss) figure on a quarterly basis, however, by increasing the loss (or reducing the profit) for each of the first three quarters of fiscal 2003.

The accompanying notes are an integral part of these Consolidated Interim Financial Statements

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CONSOLIDATED BALANCE SHEETS

(In millions of SEK)	Note	February 29, 2004	February 28, 2003
ASSETS
Fixed assets
Goodwill		720	765
Total intangible fixed assets		720	765
Buildings and land		2	2
Equipment, tools, fixtures and fittings		33	38
Vehicles		1,492	1,793
Total tangible fixed assets		1,527	1,833
Capitalized borrowing costs		99	92
Other long-term receivables		6	5
Receivable due from group companies		29	25
Total financial fixed assets		134	122
Total fixed assets		2,381	2,720
Current assets
Inventories		30	35
Accounts receivable		299	335
Other current receivables		40	37
Accrued income and prepaid expenses		215	177
Total receivables		554	549
Cash and bank balances	4	351	199
Total current assets		935	783
TOTAL ASSETS		3,316	3,503

The accompanying notes are an integral part of these Consolidated Interim Financial Statements

13

CONSOLIDATED BALANCE SHEETS

(in millions of SEK)	Note	February 29, 2004		February 28, 2003
		(Unaudited)
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Restricted equity
Share capital (5 000 shares at par value SEK 100)		1		1
Restricted reserves		-2		27
Total restricted equity		-1		28
Non-restricted equity
Retained earnings		80		394
Net loss		(409	)	(344	)
Total non-restricted equity		(329	)	50
Total shareholder’s equity	8	(330	)	78
Liabilities
Provisions:
Provisions for pensions and similar commitments		61		69
Provisions for loss contracts		86		46
Deferred tax liability		0		56
Total provisions		147		171
Non current liabilities
Liabilities to credit institutions	4	16		858
Senior subordinated notes	4	2,673		1,460
Total non current liabilities		2,689		2,318
Current liabilities
Short-term portion of long-term liabilities	4	—		145
Accounts payable		285		244
Other current liabilities		114		104
Accrued expenses and deferred income		411		443
Total current liabilities		810		936
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES		3,316		3,503
PLEDGED ASSETS AND CONTINGENT LIABILITIES	7
Pledged assets		2,423		2,848
Contingent liabilities		648		648
TOTAL PLEDGED ASSETS AND CONTINGENT LIABILITIES		3,116		3,496

The accompanying notes are an integral part of these Consolidated Interim Financial Statements

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CONSOLIDATED CASH FLOW STATEMENTS

	Note	GroupMarch 1, 2003 - February 29, 2004		GroupMarch 1, 2002 - February 28, 2003
Cash flow from operating activities
Loss after financial items		(463	)	(427	)
- Reversal of depreciation and amortization		363		404
- Reversal of capital (gains) losses		(6	)	4
- Reversal of change of provisions		32		16
- Reversal of amortization of deferred financing costs		41
- Reversal of foreign exchange (gain)/loss		25
Change in interest receivables		1		3
Change in interest liabilities		6		27
Paid taxes		0		2
		(2	)	29
Change in working capital
Increase (-)/decrease (+) in stock		5		(4	)
Increase (-)/decrease (+) in current receivables		(11	)	(16	)
Increase (+)/decrease (-) in current liabilities		12		2
Net cash flow provided by (used in) operating activities		4		11
Cash flow from investing activities
Investments in financial fixed assets		(48	)	—
Investments in land, buildings, machinery and equipment		(30	)	(253	)
Sales of land, buildings, machinery and equipment		21		75
Sale of financial fixed assets		—		7
Net cash flow used in investing activities		(57	)	(171	)
Cash flow from financing activities
Proceeds from borrowings		1,198		28
Repayments of long-term borrowings		(990	)	(86	)
Refinancing costs and other		—		(6	)
Net cash flow provided by (used in) financing activities		208		(64	)
INCREASE (DECREASE) IN CASH AND BANK BALANCES		155		(223	)
CASH AND BANK BALANCES AT BEGINNING OF PERIOD		199		422
Translation difference		(3	)	0
CASH AND BANK BALANCES AT END OF PERIOD		351		199

The accompanying notes are an integral part of these Consolidated Interim Financial Statements

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NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)

(All amounts in millions of SEK unless otherwise stated)

Organization

Concordia Bus AB, together with its subsidiaries (“Concordia”), is a Swedish registered limited liability company, wholly owned by Concordia Bus Holding AB (reg no 556574-8240) with its registered office in Stockholm, Sweden. The ultimate parent company of the group is Concordia Bus BV, a company domiciled in the Netherlands.

The operations of Concordia consist of providing regular bus services under contract through its subsidiary Concordia Bus Nordic AB, to transit authorities in Sweden, Norway and Finland. In addition to contracted services, Concordia also supplies extensive express bus services over major portions of Sweden, as well as charter and tour bus services, mainly in Gothenburg and Stockholm.

The unaudited consolidated financial statements for the year ended February 29, 2004 and 2003 include adjustments, all of which are normal recurring adjustments, which Concordia’s management considers necessary for a fair presentation of the results for these unaudited periods.

Accounting principles

The same accounting policies and methods of computation are followed in the consolidated interim financial statements as of and for the three months ended February 29, 2004 as compared with the most recent annual financial statements.

Going concern

Concordia has approximately SEK 2,391 million of long-term debt due to third parties, excluding long-term finance lease obligations. Concordia’s ability to service the existing debt (interest and amortization) is dependent on the underlying businesses generating sufficient cash flow. Revenues generated by the underlying businesses during the period March 1, 2003 – February 29, 2004 have not been sufficient to cover their costs.

Concordia Bus Nordic AB and its subsidiaries are continuing to implement cost reduction initiatives and have started to see signs of significant improvements in compensation levels from their contracts with public transportation authorities.  If the cost-cutting initiatives or other measures that management deem required are not successful and losses continue, these companies’ equity bases may need to be restored and, if they are not able to comply with the covenants of the debt agreements, they may require waivers from their lenders or additional equity funding in order to continue to present financial statements under the assumption that Concordia will continue as a going concern.

These financial statements have been prepared under the assumption that the group will be successful in its initiatives and, consequently, they have been prepared assuming that Concordia will continue as a going concern.  These financial statements have also been prepared under the assumption that Concordia will be in compliance with its debt covenants for the upcoming 12-month period.  If Concordia would be in breach of any of its debt covenants during the next 12 months, a major portion of its long-term debt would become due and payable.

These unaudited interim financial statements have been prepared in accordance with the recommendations issued by the Swedish Accounting Council’s recommendation regarding interim financial statements.

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Note 1. Net revenue and operating profit (loss) by segment

Revenue	December 1, 2003 - February 29, 2004	December 1, 2002 - February 28, 2003	March 1, 2003 - February 29, 2004	March 1, 2002 - February 28, 2003
CPTA – Sweden	884	870	3,469	3407
CPTA – Norway	98	102	359	442
CPTA – Finland	98	96	386	394
Total CPTA	1,080	1,068	4,214	4,243
Express	81	71	327	295
Interbus	21	25	110	127
Total bus operations	1,182	1,164	4,651	4,665
Other revenue and group elimination	21	25	110	93
Total revenue	1,203	1,189	4,761	4,758

Operating profit (loss) by segment, before overhead allocation.

Operating profit (loss)	December 1, 2003 - February 29, 2004		December 1, 2002 - February 28, 2003 Reported		December 1, 2002 - February 28, 2003 Restated*
CPTA – Sweden	(104	)	(183	)	(77	)
CPTA – Norway	1		(29	)	(15	)
CPTA – Finland	(10	)	(9	)	(9	)
Total CPTA	(113	)	(221	)	(101	)
Express	4		(4	)	3
Interbus	-2		(5	)	(1	)
Total Express and Interbus	2		(9	)	2
Total bus operations	(111	)	(230	)	(99	)
Gain of sale of fixed assets	—		—		—
Goodwill amortization	(12	)	(11	)	(11	)
Head office items and others	(6	)	89		(29	)
Total operating profit	(129	)	(152	)	(139	)

Operating profit (loss)	March 1, 2003 - February 29, 2004		March 1, 2002 - February 28, 2003 Reported		March 1, 2002 - February 28, 2003 Restated*
CPTA – Sweden	(57	)	(115	)	(18	)
CPTA – Norway	2		(23	)	(23	)
CPTA – Finland	(24	)	(23	)	(23	)
Total CPTA	(79	)	(161	)	(64	)
Express	31		25		31
Interbus	4		4		8
Total Express and Interbus	35		29		39
Total bus operations	(44	)	(132	)	(25	)
Gain of sale of fixed assets	—		—		—
Goodwill amortization	(45	)	(44	)	(44	)
Head office items and others	(66	)	4		(103	)
Total operating profit	(155	)	(172	)	(172	)

*) We have restated for fiscal 2003 the allocation of our operating lease charges so that only the depreciation element is included in the costs for each operating segment’s operating profit (or loss).  We have also removed from each operating segment the head office costs that we had previously allocated to each one.  These are now reported in a separate line item “Head office items and other”.  In addition, we now allocate our gain or loss on the sale of assets by individual operating segment and no longer as a separate line item.  These restatements affect the reported operating profit/(loss) for our operating segments for fiscal 2003; they do not affect the overall operating profit of the Concordia Group for each quarter.

In fiscal 2003, we had initially booked our loss on our sale of fixed assets in the fourth quarter as a year-end adjustment. We have now restated this loss to report the loss in the period when the assets were sold. This restatement does not change our total operating loss figure for fiscal 2003.  It does impact the operating profit/(loss) figure on a quarterly basis, however, by increasing the loss (or reducing the profit) for each of the first three quarters of fiscal 2003.

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Restated operating profit (loss) by segment and quarter before overhead allocation for total fiscal year 2003

Operating profit (loss)	March 1, 2002 - May 31, 2002 Restated		June 1, 2002 - August 30, 2002 Restated		Sept 1, 2002-Nov 30, 2002 Restated		Dec 1, 2002-Feb, 28 2003 Restated		Total year
CPTA – Sweden	34		13		13		(78	)	(18	)
CPTA – Norway	(2	)	(6	)	0		(15	)	(23	)
CPTA – Finland	(2	)	(5	)	(6	)	(10	)	(23	)
Total CPTA	30		2		7		(103	)	(64	)
Express	7		14		6		3		30
Interbus	3		5		1		(1	)	8
Total Express and Interbus	10		19		7		2		38
Total bus operations	40		21		14		(101	)	(26	)
Gain of sale of fixed assets	—		—		—		—		—
Goodwill amortization	(11	)	(11	)	(11	)	(11	)	(44	)
Head office items and others	(24	)	(24	)	(27	)	(27	)	(102	)
Total operating profit	5		(14	)	(24	)	(139	)	(172	)

Note 2. Items affecting comparability and other exceptional items*

MSEK	December 1, 2003 - February 29, 2004		December 1, 2002- February 28, 2003	March 1, 2003 - February 29, 2004	March 1, 2002 - February 28, 2003
Stockholm/Uppsala exceptional operating costs			18		85
Termination payment Departing MD	3		—		7
Exceptional Revenue relating to prior years	(15	)	—	—	(7	)
Provision for termination costs Gothenburg	6		25
Startup costs Scaraborg and Ostfold tender
Total adjustments reported	—		18	—	67
Gain on sale reversal SBC fleet revaluation	—		14	—	14
Provision for Future losses on contracts	60		25	60	15
Total adjustments restated			57		114

Note 3. Interest expense and similar items

MSEK	December 1, 2003 - February 29, 2004		December 1, 2002 - February 28, 2003		March 1, 2003 - February 29, 2004		March 1, 2002 - February 30, 2003
Interest cost payable	(52	)	(56	)	(237	)	(234	)
Amortization of deferred financing costs	(4	)	(4	)	(41	)	(18	)
Other financial charges	(3	)	(4	)	(13	)	(11	)
Foreign exchange gains/(losses)	32		(9	)	(24	)	(2	)
Total	(151	)	(73	)	(315	)	(265	)

Does not add up !!

Note 4. Liabilities to credit institutions and net indebtedness

MSEK	February 29, 2004		February 28, 2003
Syndicated bank facility, STIBOR/EURIBOR	—		975
Senior Subordinated Notes, 11%	1,441		1,460
Liabilities to credit institutions	2,391		2,435
Other long-term liabilities	18		21
Short term portion of finance lease obligation	6		7
Total debt	2,415		2,463
Less Cash and bank balance	(351	)	(199	)
Net indebtedness	2,191		2,264
Total debt	2,415		2,463
Short term portion of long term debt .. not possible – only refer to fin lease	(262	)	(—	)
Total long term debt	2,153		2,463

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* Exceptional items are those, which the management believes, are non-recurring and have a non-operational nature and are necessary to explain the development of operating performance. These may not meet Swedish or US GAAP definitions of exceptional and extraordinary items.

Note 5. Operating leases

The net present values of the future lease payments for rentals are as follows:

MSEK	February 29, 2004	February 28, 2003
Net present value of future lease payments
- Vehicles	905	945
- Real estate and other	52	58
Total	957	1,003

Note 6. Fair value of financial instruments

Fuel hedge contracts

The Concordia Bus Group is exposed to commodity price risk through its fuel usage. Management actively tries to minimize the negative effects of fluctuations in the market price. During the quarter ended February 29, 2004, 17% of Concordia’s fuel usage was hedged through diesel swaps at a fixed price for the coming 12 months. The hedge contracts expire February 28, 2005.

Interest/currency hedges

Certain of Concordia’s borrowings are on a floating rate. Management has made a decision to actively try to minimize the risk of interest rate fluctuations by entering into interest rate swaps and interest rate caps, which gives Concordia a larger portion of fixed interest rate arrangements.

The Company is also exposed to currency fluctuations, primarily as an effect of loans denominated in foreign currencies. Management has made a conscious decision to try to minimize the impact of currency fluctuations on cash payments related to foreign currencies and has therefore entered into currency collar arrangements. As of February 29, 2004, 50% of the interest payments on the senior notes of €160 million were hedged for the coming 2½ years.

Note 7.  Pledged assets and contingent liabilities

MSEK	February 29,2004	February 28,2003
Pledged shares in subsidiaries	741	973
Floating charge certificates	120	117
Pledged assets	1,351	1,757
Guarantees and other contingent liabilities	45	1
Conditional shareholder’s contribution	648	648
Total	3,116	3,496

The following securities exist as of February 29, 2004:

The company has pledged the shares of Concordia Bus Nordic AB;

Concordia Bus Nordic AB has pledged the shares of

Swebus Fastigheter AB,

Swebus AB,

Concordia Bus Finland Oy AB,

Swebus Bus Co AB;

Ingenior M.O. Schoyens Bilcentraler AS

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Swebus Fastigheter AB has pledged the shares of

Alpus AB,

Enköping-Bålsta Fastighets AB, and

Malmfältens Omnibus AB;

Swebus Busco AB and Ingenior M.O. Schoyens Bilcentraler AS has granted pledge over its buses in aggregate amount of SEK 1,303,892,617;

Concordia Bus Finland Oy AB has granted pledge over floating charge certificates in an aggregate amount of EUR 1,316,138.

Swebus AB has granted pledge over floating charge certificates in an aggregate amount of SEK 100,000,000;

Alpus AB has granted pledge over floating charge certificates in an aggregate amount of SEK 600,000;

Enköping-Bålsta Fastighets AB has granted pledge over floating charge certificates in aggregate amount of SEK 2,400,000;

Malmfältens Omnibus AB has granted pledge over floating charge certificates in an aggregate amount of SEK 2,500 000;

Note 8. Equity

MSEK	Restricted equity	Unrestricted equity		Total
Opening balance March 1, 2003	28	50		78
Change in cumulative translation adjustment	-29	29		—
Net loss for the period	—	(409	)	(409	)
Ending balance February 29, 2004	-1	(329	)	(330	)

20