European medium-term note programme (EMTN)
National Express Group plc has established a European medium-term note programme (EMTN) to provide a flexible means of issuing bonds in various currencies and maturities.
To view the latest EMTN prospectus see below:
Prospectus dated 11 October 2019
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Supplementary Prospectus dated 06 November 2019
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Supplementary Prospectus dated 08 November 2019
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In November 2019, National Express Group Plc issued a £250m Sterling bond, final terms of which are included below:
Final terms dated 18 November 2019
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In November 2016, National Express Group Plc issued a £400m Sterling bond, final terms of which are included below:
Final terms dated 09 November 2016
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The Group maintains a prudent approach to its financing and is committed to an investment grade credit rating. The Board’s policy is to target a level of debt that allows for disciplined investment and ample headroom on its covenants, with net debt to EBITDA of 2.0 times to 2.5 times over the medium-term. Moody’s credit rating agency upgraded its investment grade rating to Baa2 during the year while Fitch credit rating agency re-affirmed its investment grade credit rating at BBB-/stable.
The Group’s key accounting debt ratios at 31 December 2018 were as follows:
- Our bank covenant for gearing is not to exceed 3.5 times net debt to EBITDA – in 2018 the gearing ratio was 2.3 times EBITDA (31 Dec 2017: 2.3x);
- Our bank covenant for the interest cover ratio is EBITDA not to be less than 3.5 times interest – in 2018 the interest cover ratio was 10.5 times interest (31 Dec 2017: 10.2x).
The Group has a strong funding platform that underpins the delivery of its strategy. Core funding is provided from non-bank sources to provide improved certainty and maturity of funding. In April 2018, the Group extended its £527 million committed bank facilities to mature in April 2023 (with two one year extension options). In January 2019, the Group entered into a new £500 million bridge-to-bond facility in anticipation of the refinancing of the Group’s €250 million floating rate note maturing in May 2020 and £225 million bond maturing in June 2020. The facility is for an initial period of 18 months and includes committed options to extend the maturity date until January 2022. This facility gives the Group significant flexibility, enabling us to choose the optimum moment to refinance, taking into account the prevailing low interest rate environment and potential future rate developments, without incurring punitive refinancing charges.
At 31 December 2018, the Group had £1.6 billion of debt capital and committed facilities, comprised the £225 million Sterling bond and €250 million Floating Rate Note both maturing in 2020; a private placement of €78 million maturing in 2021; the £527 million of Revolving Credit Facility (‘RCF’) maturing in 2023; a £400 million Sterling bond maturing in 2023 and £143 million of finance leases. At 31 December 2018, the Group’s RCF was undrawn with £644 million in cash and undrawn committed facilities available.
At 31 December 2018, the Group had foreign currency debt and swaps held as net investment hedges: these help mitigate volatility in the foreign currency translation of our overseas net assets. The Group also hedges its exposure to interest rate movements to maintain an appropriate balance between fixed and floating interest rates on borrowings. It has therefore entered into a series of swaps that have the effect of converting fixed rate debt to floating rate debt. The net effect of these transactions was that, at 31 December 2018, the proportion of Group debt at floating rates was 37% (2017: 43%).
The Group’s principal defined benefit pension schemes are all in the UK. The combined deficit under IAS 19 at 31 December 2018 was £116.8 million (Dec 2017: £94.5m).
The two principal plans are the UK Group scheme, which closed to new accrual in 2011, and the West Midlands Bus plan (‘WM Bus’), which remains open to accrual for existing active members only. The overall level of deficit contributions will be around £8 million in total per annum until 2020.
In October 2018, the Group scheme executed an insurance “buy-in” with Rothsay Life for 100% of the future obligations of the funds of the UK Group scheme. Whilst this results in a reduction to the actuarial surplus, this materially derisked the Group’s balance sheet, as any change in future liabilities will be met by the insurance company.
The IAS 19 valuations for the principal schemes at 31 December 2018 were as follows:
- WM Bus: £127.3 million deficit (2017: £133.8m deficit)
- UK Group scheme: £14.9 million surplus (2017: £43.2m surplus)