Full Year Results for the year ended 31 December 2016
Delivering strong growth from our diversified portfolio of businesses
Our diversified portfolio has delivered another strong performance in 2016, with both revenue and profits up on a constant currency and statutory basis, improving returns and strong cash generation, and a growing dividend. We have seen particularly strong growth in our overseas markets both from acquisitions and organically. As we enter 2017, we have a number of tailwinds including the benefits from our successful refinancing of our bond, the full year effect of acquisitions and lower fuel costs. We have a clear strategy for growth and remain focused on disciplined capital allocation, with a strong pipeline of opportunities for 2017 and beyond. The strength of our business, coupled with the removal of our c2c franchise commitments, means we are both raising our annual free cash flow guidance to £120 million and we propose a 10% increase in the final dividend.
On February 10th we completed the sale of c2c to Trenitalia. The results shown below from continuing operations, exclude the contribution from the UK Rail division in accordance with IFRS.
|FY 2016||FY 2015||Change||Change at constant currency|
|Group normalised operating profit||£219.0m||£191.8m||+14.2%||+4.8%|
|Group statutory operating profit||£185.2m||£166.1m||+11.5%|
|Group normalised PBT||£170.1m||£148.4m||+14.6%|
|Group statutory PBT||£136.3m||£122.7m||+11.1%|
|Total Operations including UK Rail|
|Group normalised PBT||£175.0m||£150.1m||+16.6%|
|Statutory profit for the year||£120.0m||£109.1m||+10.0%|
|Group statutory EPS||23.0p||20.9p||+10.0%|
|Free cash flow||£138.6m||£111.0m||£27.6m|
|Full year proposed dividend||12.28p||11.33p||+8.4%|
Our focus on operational excellence continues to deliver results
- Strong growth in North America, with revenue and operating profits up 14.3% and 11.9% on a constant currency basis, with another successful bidding season
- Record passenger numbers in Spain and Morocco, supporting revenue growth of 5.7% and operating profit growth of 5.3%, both in constant currency
- Good performance from UK Coach and resilient results from UK Bus in challenging market conditions
- First full year of our German rail operations, carrying over 20 million passengers and delivering operational improvements relative to the previous operator
- Strong growth in passengers in c2c, up 6.7%, well ahead of average for London and South East, delivering revenue growth of 5.7%
- All three UK businesses awarded the British Safety Council Sword of Honour, while ALSA has received the prestigious Prince Michael International Road Safety Award for its ‘Driving out Harm’ campaign in Morocco
- UK Coach joins c2c with EFQM 5-star rating
We continue to deploy technology to drive efficiency and growth and raise standards
- New real-time active revenue management systems fully installed in our UK and Spanish coach businesses, with positive early signs, helping to drive revenue, profit and incremental growth in 2017
- Continued investment in new mobile websites and ticketing apps to drive higher online transactions, conversion rates and lower costs
- Contactless payment being enabled in UK Bus in 2017
- Continuing to roll out Lytx DriveCam technology across our businesses, helping to deliver a reduction in collisions and associated costs
- Launch of a new free ‘infotainment’ system, VUER, in UK Coach, building customer loyalty and driving higher levels of customer satisfaction; trialling in UK Bus
Growing through new business opportunities including bolt-on acquisitions
- Completed 11 acquisitions in the year, all of which will be earnings accretive within the first 12 months:
- 8 bolt-on acquisitions in North America, adding 1,100 school buses and 450 transit vehicles, with Ecolane, a paratransit planning and scheduling software provider delivering new contract wins since acquisition
- 2 acquisitions in ALSA: 1 regional bus business giving us entry into Ibiza; and, 1 private hire transfer operator in Switzerland, providing entry to the lucrative ski and alpine tourist market and platform for expansion in complementary markets
- Acquisition of Clarkes in UK Coach, building our commuter business and providing entry into the in-bound tourist market
- Our North American acquisitions made in 2015 delivered an average ROIC of between 15% and 20%
- Submitted bids to operate the Casablanca Tramway and Singapore urban bus
- Actively looking at a number of attractive growth opportunities
- Disposal of c2c to Trenitalia, freeing up capital for investment in higher growth markets
Dean Finch, National Express Group Chief Executive said:
“We have again delivered a strong set of results from our diversified group of international businesses and remain confident for our future prospects. Our focus on operational excellence is helping drive organic growth across the Group, and this is being complemented by significant returns from our recent acquisitions. We carried a record 921 million passengers in 2016 and will continue to invest in new technology to deliver ever-improving services to our customers.
“With the recent sale of our c2c franchise, we have further opportunity to invest in our fastest growing markets which deliver strong returns, but we will continue to do so in a disciplined manner. We have developed a strong track record and team in identifying and completing acquisitions that generate significant value and we have identified a strong pipeline of further opportunities. Our confidence in the future is demonstrated by the increase in our annual free cash flow guidance to £120 million and the proposed 10% increase in the final dividend.”
National Express Group PLC
|Matthew Ashley, Group Finance Director||0121 460 8655|
|Anthony Vigor, Director of Policy and External Affairs||07767 425822|
|Louise Richardson, Investor Relations Manager||07827 807766|
|Rebecca Mitchell||020 7379 5151|
There will be a presentation and webcast for investors and analysts at 0900 on 23 February 2017. Details are available from Rebecca Mitchell at Maitland.
Unless otherwise stated, all operating profit, margin and EPS data refers to normalised results, which can be found on the face of the Group Income Statement in the first column. Normalised profit is defined as being the IFRS result excluding intangible asset amortisation and tax relief thereon. The Board believes that the normalised result gives a better indication of the underlying performance of the Group.
In addition, unless other stated, all pre-tax results and margin data refers to the Group’s continuing operations. Further details of discontinued operations can be found in note 6 to the Financial Statements.
Constant currency basis compares the current year’s results with the prior year’s results translated at the current year’s exchange rates. The Board believes that this gives a better comparison of the underlying performance of the Group.