Full Year Results for the year ended 31 December 2013
National Express Group PLC ('National Express' or the 'Group'), a leading international public transport group, operates bus and coach services in the UK, continental Europe, North Africa and North America, together with rail services in the UK.
National Express has delivered a strong financial performance in 2013. Normalised Group profit before tax was ahead of target at £143.7 million, including a fourth consecutive year of record profit in our core non-rail businesses. Group revenue grew 3% and we generated over £180 million of free cash flow, again ahead of target.
- Group revenue increased 3% to £1.89 billion (2012: £1.83bn), with 7% growth in total non-rail revenue
- Normalised operating profit from core non-rail businesses reached a record £185.5 million (2012: £185.2m)
- Group normalised profit before tax declined to £143.7 million (2012: £164.1m) reflecting the handover of the National Express East Anglia franchise during 2012
- Core non-rail ROCE increased to 11.1% (2012: 10.6%)
- Free cash flow of £182.8 million, over £30 million ahead of target (2012: £140.8m)
- Net debt reduced by over £80 million to £746.1 million (2012: £828.2m). On track to reduce net debt to around 2x EBITDA by the end of 2014
- Full year proposed dividend of 10.0 pence, up 3% year-on-year
- UK Coach express passenger revenue up 7%, with operating margin over 9%
- North America revenue over US$1 billion, up 10%, with almost US$200 million of operating cash generation and Return on Assets ('ROA') target exceeded
- New contracts secured in Spain and Morocco
- Bids submitted for Essex Thameside and Crossrail competitions
- Industry-leading partnership agreed in UK Bus with local transport authority
- c2c achieves industry-leading performance for 2 consecutive years
- £1.8 billion of revenue secured from new markets, including rail contracts and coach services in Germany
- New business pipeline of opportunities worth over £10 billion in revenue
Dean Finch, National Express Group Chief Executive, commented:
"National Express has made important progress in 2013. These results show how we have been able to address the headwinds facing the Group at the start of last year. We beat our targets, especially on free cash flow, and have raised the dividend to reflect our confidence. I am particularly pleased with the strong growth in UK Coach, following its difficult year in 2012, and our performance in North America.
"We also made important strides in business development during 2013. We entered new markets, most significantly Germany. We have won important new contracts and are shortlisted for a number of rail franchises in the UK and Germany. We entered 2014 actively working on a £10 billion pipeline of opportunities."
We intend to grow profit across all of our non-rail businesses and develop our rail business by winning new franchises. We will continue to make progress against our three strategic goals. Focused on delivering operational excellence, our coach services in UK and Spain will benefit from continued development of yield management and greater retail distribution. Bus will benefit from our focus on service quality, network improvements and greater use of technology in the UK and further new contract opportunities in Spain and Morocco. North America School Bus will continue to improve its contract portfolio, driving capital returns and selectively adding bolt-on acquisitions and conversion opportunities. All businesses will deliver a minimum 1% real reduction in costs, supported by unchanged hedged fuel prices, driving margin progress across the Group.
With our focus on superior cash generation, we have a robust financial platform which has underpinned an increased dividend to shareholders. In 2014 we are targeting further free cash flow of £150 million. Our strong cash generation and targeted capital deployment will further reduce net debt, improve returns to shareholders and fund our new business development programme. In the last three months alone, we have submitted two rail tenders, successfully bid for two bolt-on acquisitions, begun bus operations in Tangiers and submitted contract tenders in Spain and North America Transit. We expect good progress from our £10 billion pipeline of capital-light bid opportunities, securing new contracts, concessions and business opportunities to enhance shareholder value.
|Year ended 31 December||2013||2012|
|Normalised operating profit||Core non-rail||185.5||185.2|
|Share of results from associates||0.6||1.4|
|Net finance costs||(49.8)||(49.2)|
|Normalised profit before taxation||143.7||164.1|
|IFRS profit for the year||58.3||61.3|
|Normalised basic EPS (pence)||Non-rail||20.1||21.6|
|Total proposed dividend per share (pence)||10.0||9.75|
National Express Group PLC
|Jez Maiden, Group Finance Director||0121 460 8657|
|Stuart Morgan, Head of Investor Relations||07770 701797|
|Anthony Vigor, Director of Policy and External Affairs||07767 425822|
|Rebecca Mitchell||07951 057351|
Unless otherwise stated, all operating margin and EPS data refer to normalised results, which can be found on the face of the Group Income Statement in the first column. The definition of normalised profit is as follows: IFRS result found in the third column, excluding intangible asset amortisation, loss on disposal of business, exceptional items and tax relief thereon. The Board believes that the normalised result gives a better indication of the underlying performance of the Group.
Underlying revenue compares the current year with prior year on a consistent basis, after adjusting for the impact of currency, acquisitions, disposals and rail franchises no longer operated.
Like-for-like revenue measures underlying revenue after adjusting for increases or decreases in miles operated, typically used as a metric in urban bus operations.
‘Core non-rail’ businesses are UK Bus, UK Coach, Spain (including Morocco) and North America (including Transit). It excludes the German Coach start-up.
Operating margin is the ratio of normalised operating profit to revenue.
‘Return on capital employed’ (‘ROCE’) is normalised operating profit divided by tangible and intangible assets for the core non-rail businesses.
‘Return on assets’ (‘ROA’) is normalised operating profit divided by tangible assets.
Operating cash flow is intended to be the cash flow equivalent of normalised operating profit. Free cash flow is intended to be the cash flow equivalent of normalised profit after tax. A reconciliation is set out in the table within the Finance Director’s review.
Free cash flow is intended to be the cash flow equivalent of normalised profit after tax. A reconciliation is set out in the table within the Finance Director’s review.
Net debt is defined as cash and cash equivalents (cash overnight deposits and other short-term deposits), and other debt receivables, offset by borrowings (loan notes, bank loans and finance lease obligations) and other debt payable (excluding accrued interest).
EPS generated by the Rail business is the normalised operating profit of the Rail division, taxed at the UK tax rate, divided by the basic number of shares in issue.
The annual punctuality measure for c2c is the moving annual average (MAA) public performance measure (PPM) to 4 January 2014.
Safety Incidents measure those for which the Group is responsible and is based on the Fatalities and Weighted Injuries Index used in the UK Rail industry. EPS generated by the Rail business is the normalised operating profit of the Rail division, taxed at the UK tax rate, divided by the basic number of shares in issue.