COWIE Group this morning became the second-largest UK bus operator when its #282m bid for British Bus took effect. Yesterday it spent #24.5m buying North East Bus from National Express.

NEB, which operates in the County Durham and Teesside areas, had a turnover of #29m last year which generated profits of #3m. The acquisition appears marginally cheap as recent bus purchase prices have been based on turnover.

These two deals mean Cowie has a 18% share of the UK market. It now has 16 operations with an annual turnover of #419m. These include Clydeside Buses, which turns over around #14m.

The largest bus operator is FirstBus, whose recent acquisition of Strathclyde Buses gave it a 20% market share, while Stagecoach is third with 17%.

As turnover in the original Cowie, which is heavily oriented towards London, was just #54.5m in the first six months, the group is obviously in a period of hefty transition.

That includes the car business, where the 36 dealerships are in a state of flux as Cowie comes to terms with changes introduced by Ford and Vauxhall in particular and their aggressive price cutting to generate volumes.

Chief executive Gordon Hodgson said that orders for P registered cars, which go on sale today, were 15% ahead of last year, although this is a very narrow margin business which scarcely did better than break even in the first six months.

In the half year to June, group turnover was unchanged at #529m, but profits rose 19% to #32.2m, with the bus operations some 74% ahead at #6.87m. Leasing raised its contribution by 8.5% to #17.6m helped by improving values from residuals or cars sold off after the contract period, reflecting the general shortage of good second-hand vehicles. Cowie has a fleet of 68,500 cars and is looking to add substantially through acquisition.

Chairman Sir James McKinnon, best known as the former finance director of Imperial Tobacco and then as the Ofgas regulator, ruled out Cowie becoming interested in rail franchises.

The interim dividend has been raised 11.5% to 3.4p.

Although its gearing is 174% following the acquisitions, Cowie has interest cover of more than three-and-a-half times, which gives reassurance as to future trading prospects.

The shares closed down 1p at 373p.