Full Year Results for the year ended 31 December 2017
Growth across every division of an internationally diversified business
- Strong performances in both international divisions, combined with growth in the UK, delivering significant increases in Group revenue, profit and cash and reduced gearing.
- Good start to 2018, with Group revenues and profits up in January, notwithstanding significant weather-related disruption in North America.
- Expect organic revenue growth in 2018 in every division and encouraging start to current North American School Bus bid season.
- Enter 2018 with tailwinds such as £20 million lower fuel costs and a lower Group effective tax rate after recent US reform.
- Proposing a 10% increase in the final dividend and expecting annual free cash flow to be broadly the same as 2017.
|FY 2017||FY 2016||Change||Change at constant currency|
|Group normalised operating profit||£241.5m||£217.5m||+11.0%||+6.0%|
|Group normalised PBT||£200.0m||£168.6m||+18.6%||+11.7%|
|Normalised basic EPS||29.1p||26.3p||+10.6%|
|Group statutory operating profit||£175.0m||£150.1m||+16.6%|
|Group statutory PBT||£120.0m||£109.1m||+10.0%|
|Group PAT from continuing operations||27.3p||23.4p||+16.7%|
|Statutory basic EPS||25.7p||23.0p||+11.7%|
|Free cash flow||£146.4m||£138.6m||+5.6%|
|Full year proposed dividend||13.51p||12.28p||+10.0%|
Our focus on operational excellence continues to deliver results
- North America grew revenue (10.1%) and normalised operating profit (6.6%) in constant currency. This has been delivered through a combination of organic growth, cost efficiencies and the benefit of recent acquisitions.
- ALSA has delivered revenue growth of 3.6% and a normalised operating profit increase of 4.4%, both in constant currency.
- Sophisticated pricing in our UK bus and coach businesses has delivered strong second halves to the year, reversing their first halves’ declines. As a newly combined division, growth in both revenue of 0.6% and normalised operating profit of 5.3% has been achieved.
- German Rail saw big increases in constant currency revenue (20.4%) and normalised operating profit (€7.7m) in part due to a recognition of revenues we were unable to include in the 2016 accounts.
We continue to deploy technology to drive efficiency and growth and raise standards
- Our increasingly sophisticated real-time Revenue Management Systems (RMS) have helped drive both revenue and seat occupancy rate increases in UK coach and ALSA.
- We have seen further growth in our more cost-efficient digital sale channels, which also allow more sophisticated and targeted pricing.
- We continue to roll-out Lytx DriveCam smart safety cameras on our vehicles, improving safety performance, raising service standards and delivering cost savings.
Growing through new business opportunities including bolt-on acquisitions
- We made a further nine acquisitions in the year, with targeted returns of at least 15% and have a strong pipeline of new opportunities.
- We continue to target new contract opportunities, in particular: North American transit and charter markets, as well as Morocco and German rail.
Dean Finch, National Express Group Chief Executive said:
“I am very pleased with our performance in 2017. Strong performances in our North American and ALSA divisions, combined with growth in our UK businesses, have delivered significant increases in Group profit, revenue and cash generation. We carried more passengers than we did last year reflecting the strong focus in all our businesses on good service and value for money. Our international diversity is an important asset, but it is particularly pleasing that all divisions contributed strongly to our Group performance. The second half performances of our UK businesses were particularly impressive.
“We continue to invest in the future success of our business, with our focus on operational excellence and the deployment of technology to raise standards and drive efficiency. We will continue to pursue new growth opportunities, including through further acquisitions to add to the nine we made in 2017. I believe our industry-leading position means we are well-placed for the upcoming concession renewals in Spain. Although the business has suffered weather disruption in North America at the start of 2018, I expect the missed days to be recovered later this year and I am so far pleased with the above inflation price increases in school bus contract renewals.
“Our strategy is simple: we focus on providing well run, safe, value for money services in and around some of the most affluent cities and regions in the world. This sustainable strategy is proving to be highly successful as the proposed 10% increase in the final dividend demonstrates. I am looking forward with optimism to the coming year, which I expect once again will deliver growth in revenue, profits, cash flow and dividends.”
National Express Group PLC
|Chris Davies, Group Finance Director||0121 460 8655|
|Anthony Vigor, Director of Policy and External Affairs||07767 425822|
|Louise Richardson, Head of Investor Relations||07827 807766|
|Neil Bennett Rebecca Mitchell||020 7379 5151|
There will be a presentation and webcast for investors and analysts at 0930 on 1 March 2018. Details are available from Mads Neumann at Maitland.
Normalised operating profit, margin and EPS data, as referenced in this report, can be found on the face of the Group Income Statement in the first column. Normalised profit is defined as being statutory profit before intangible amortisation for acquired businesses, US tax reform, profit for the year from discontinued operations and consequent UK restructuring. The Board believes that this gives a more comparable year-on-year indication of the operating performance of the Group and allows the users of the financial statements to understand management’s key performance measures.
Unless otherwise noted, all references to profit measures throughout this review are for continuing operations for both the current and prior reporting period. Further details of discontinued operations can be found in note 6 to the financial statements.
Underlying revenue compares the current year with the prior year on a consistent basis, after adjusting for the impact of currency.
Constant currency basis compares 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.