Financial
Relevance to strategy
Key measure of the overall performance of the business.
We are focused on driving growth in operating profit in order to generate 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.
KPI definition
Group normalised operating profit from continuing operations.
Performance
- Record Group normalised operating profit, up 1% in constant currency and 14.6% on a reported basis
- Growth being delivered both organically and through acquisitions
Remuneration linkage
Group normalised profit before tax is one of three bonus inputs to the Executive Directors’ and senior managers’ annual bonus structure.
Relevance to strategy
Strong cash generation provides the funding to invest in initiatives to drive our strategy.
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.
KPI definition
ee cash flow is the cash flow available after deducting net interest and tax from operating cash flow.
Performance
- Normalised operating cash flow of £249 million
- Generated £179 million of free cash after investing £211 million in capital expenditure to maintain fleet
- Generated over £770 million of free cash flow in the last five years
Remuneration linkage
Free cash flow is one of three bonus inputs to the Executive Directors’ and senior managers’ annual bonus structure.
Relevance to strategy
Demonstrates how efficiently the Group is deploying its capital resources and generating operating profit.
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.
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.
Performance
- ROCE of 4% – reflecting the accretive impact of our high return acquisitions
- Invested £211 million of net maintenance capital, predominantly in replacing our fleet in our existing operations
- Invested £42 million in growth capital expenditure to support growth in digital and e-commerce initiatives and mobilisation costs in Morocco and German Rail
- Strong returns generated by our acquisitions, with acquisitions delivering returns of at least 15%
Remuneration linkage
ROCE is one of the performance conditions for the Long-Term Incentive Plan of Executive Directors’ and senior managers.
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.
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.
KPI definition
The Fatalities and Weighted Injuries (FWI) Index weights injuries by severity to give an overall standard based score.
Performance
- In 2019, we saw a 51% improvement in the FWI score compared with the previous year, and a 54% improvement when adjusting for increased mileage
- First year of no at fault fatalities
- Our businesses in North America and Morocco both recorded their lowest ever scores, improving by 28.6% and 68.7% respectively on the prior year
- 88% improvement in safety performance since the introduction of Driving Out Harm in 2010 (when adjusting for increased mileage)
Remuneration linkage
FWI is an input into the Executive Directors’ and senior managers’ annual bonus structure.
Relevance to strategy
Growth in passenger journeys is a leading indicator for growing our business and hence driving modal shift from cars to buses and coaches.
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.
KPI definition
Passenger numbers as measured by the aggregate of passenger journeys across each of our operating divisions.
Our numbers for North America are estimated as our school bus services are non-ticketed.
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
Remuneration linkage
The Executive Directors’ and senior managers’ annual bonus structure typically include a component of personal objectives relating to business development metrics.
Relevance to strategy
Reducing the environmental impact of transport is core to our purpose.
Per passenger, bus and coach travel is vastly less polluting than cars and, as such, modal shift is the single most important thing we can do. But we are also committed to making public transport greener. We have adopted targets through to 2025 that are ‘science based’ and aligned with limiting global warming in line with the Paris Agreement.
KPI definition
Total Scope 1 & 2 greenhouse gas emissions divided by the total number of passenger kilometres travelled across each of our operating divisions.
* Measured as tCO2e / million passenger km
Performance
Fourth consecutive year of emissions reductions: 2.0% fall in tCO2e / million km to 19.04, our lowest figure since reporting started in 2014. This has been achieved through:
- consistent fleet renewal;
- adapting existing fleet ahead of renewal; and
- operational excellence initiatives such as a decrease in vehicle idling and network optimisation
Going forward, we have committed never to buy another diesel bus in the UK and to be zero emission in bus by 2030 and coach by 2035. We have started in the UK but will drive a similar level of ambition across the Group.
Remuneration linkage
25% of the Executive Directors’ and senior managers’ Long-Term Incentive Plan is linked to reducing GHG emissions.