Group
Relevance to strategy
Key measure of the overall performance of the business.
KPI definition
Group normalised operating profit from continuing operations.
2018 performance
- Record Group normalised operating profit, up 7.7% in constant currency and 6.7% on a reported basis
- Growth being delivered both organically and through acquisitions
Why we measure
We are focused on driving growth in operating profit in order to drive higher and sustainable returns for our shareholders and providing the platform for further growth for all our stakeholders including our employees, our customers and our partners.
Remuneration linkage
Group normalised profit before tax is one of three bonus inputs within the Executive Directors’ annual bonus structure.
Relevance to strategy
Strong cash generation provides the funding to invest in initiatives to drive our strategy.
KPI definition
Free cash flow is the cash flow available after deducting net interest and tax from operating cash flow.
2018 performance
- Normalised operating cash flow of £253 million, up £42 million on 2017
- Generated a record £199 million of free cash, £52 million higher than last year
- Generated over £785 million of free cash flow in the last five years
Why we measure
This focus on strong cash generation ensures that we are running the business efficiently, converting profit to cash to enable investment into the business and returns to shareholders, and providing the platform for further growth for all our stakeholders including our employees, our customers and our partners.
Remuneration linkage
Free cash flow is one of three bonus inputs within the Executive Directors’ annual bonus structure.
Relevance to strategy
Demonstrates how efficiently the Group is deploying its capital resources and generating operating profit.
KPI definition
Return on capital employed (‘ROCE’) is normalised operating profit, divided by average net assets excluding net debt and derivative financial instruments, translated at average exchange rates.
2018 performance
- ROCE has increased to 12.4%, reflecting the accretive impact of our high return acquisitions
- Invested £124 million of net maintenance capital, predominantly in replacing our fleet in our existing operations
- Invested £6 million in growth capital expenditure to support growth in digital and e-commerce initiatives and mobilisation costs in German Rail
- Strong returns generated by our recent acquisitions, with acquisitions delivering returns of at least 15%
Why we measure
A focus on ROCE ensures that we maintain a disciplined approach to capital investment and continue to invest in those areas in which we deliver the best returns. This ensures that we maximise returns to shareholders for the capital they invest.
Remuneration linkage
ROCE is one of the performance conditions for the Long-Term Incentive Plan.
Relevance to strategy
Safety is of paramount importance to a public transport operator and is a core measure of our strategic priority: Delivering operational excellence.
KPI definition
The Fatalities and Weighted Injuries (‘FWI’) Index weights injuries by severity to give an overall standard based score.
2018 performance
- in 2018 we saw an 8.3% increase in the FWI score compared with the previous year: however, when adjusting for increased mileage the FWI score was level with the result in 2017
- Our North America business saw a significant improvement, recording its lowest ever score and a reduction of 33% on the prior year
- 74% improvement in safety performance since the introduction of Driving Out Harm in 2010 (when adjusting for increased mileage)
Why we measure
Safety is at the heart of our Values and is our priority for both our customers and our employees.
High safety standards also help to drive sustainable growth through customer loyalty and new business wins.
Remuneration linkage
Improvement in FWI is a bonus input within the Executive Directors’ annual bonus structure.
Relevance to strategy
Growth in passenger journeys is a leading indicator for growing our business and a core measure of our strategic priority: Delivering operational excellence.
KPI definition
Passenger numbers as measured by the aggregate of passenger journeys across our five operating divisions.
Our numbers for North America are estimated as our school bus services are non-ticketed.
2018 performance
- A record number of passengers carried in 2018, with 898 million passengers travelling on our services, up 1.7% in the year
- Record number of passengers in UK coach, and in ALSA record passenger numbers in Spain, Morocco and Switzerland
- Growth in passengers across each of our businesses
Why we measure
Passenger journeys are reflective of underlying demand for travel. National Express is targeting increased passenger ridership as a longer-term driver of sustainable value for both the business and the environment, with public transport a key solution to lowering carbon emissions and easing travel congestion.
Remuneration linkage
Non-financial targets within the Executive Directors’ annual bonus structure typically include a component of personal objectives relating to business development metrics.
Relevance to strategy
Deployment of technology is one of our strategic priorities and a key driver for raising customer and safety standards together with growing our business and reducing costs.
KPI definition
Sales transacted through digital channels including websites, mobile apps, ticket machines and contactless payment, as a percentage of sales.
2018 performance
- Very strong growth in digital sales in UK bus following the launch of contactless payment in 2018, with the proportion of journeys booked through digital channels increasing to 60%
- In UK coach proportion of revenue secured through digital channels up by 9.4% over the last two years to 70%
- New app launches in ALSA helping to drive digital sales – up 4.4% to 42.2% of sales
- Digital revenue now represents 16.3% of Group sales, up 13.3% over the year
Why we measure
National Express is targeting increased sales through digital channels, not only to provide more convenient and faster methods of payment and to increase customer loyalty, but also to reduce costs and fraud.
The convenience of mobile/contactless payment also encourages customers to travel more frequently via public transport, which reduces carbon emissions and travel congestion.
Remuneration linkage
Non-financial targets within the Executive Directors’ annual bonus structure typically include a component of personal objectives relating to business development metrics.