Diversity paying dividends

Dean Finch, Group Chief Executive said:

“National Express has had another strong start to the year, delivering its best ever half year statutory profit, up 24% year-on-year. Our increasingly diversified portfolio has again delivered strong results and has entered a new phase of expansion in to complementary growth markets.

“All of our divisions have grown revenue, profit and commercial passengers through a relentless focus on good customer service and technology investment. We also continue to make disciplined acquisitions that help grow our portfolio strategically. We have made seven acquisitions so far this year and have entered new fast-growing markets, providing avenues for interesting future expansion. Our pipeline of new opportunities remains strong and growing.

“This combination of growth in our core business and the number of exciting new opportunities allows us to again increase the interim dividend by 10%. We remain on course to deliver the board’s expectations.”

Financial highlights

Highlights

• Record Group statutory half year profit before tax of £80.1 million, up 24%.
• Growth in free cash of over 3% to £85.2 million; full year guidance raised to £170 million.
• ROCE increased by 20 basis points to 12.2%; net debt gearing held flat at 2.3x EBITDA.
• Interim dividend increased by 10.1% (4.69p).

Operational excellence: organic revenue growth in every division

• Revenue growth in all main divisions:
  • North America: grew by 9.7% in constant currency to $753.2 million;
  • ALSA: grew by 7% in constant currency to €395.7 million;
  • UK: grew by 0.8% to £273.6 million, with strong commercial growth in core coach (5.2%) offset by last year’s strategic exit from 2 operations;
  • German Rail: declined 1.3% in constant currency, as last year benefitted from catch up revenues (up 5.6% on an underlying basis).

• Record normalised operating profits in our main international divisions combined with strong UK growth:
  • North America: grew by 8.7% in constant currency to $76.6 million;
  • ALSA: grew by 7.5% in constant currency to €48.6 million;
  • UK: grew by 21.5% to £31.6 million, boosted by £3.4 million of property disposals; underlying profit growth was 8.5%.

• A disciplined North American school bus bidding season, with rates secured higher than driver wage inflation:
  • Average rate increase of 6.6% on contracts up for bid or renewal, or 3.7% across the whole portfolio. Driver wage increases are projected to be 3.4% in the next school year.

• All main divisions have grown commercial passengers, with the Group carrying nearly 1.5% more year-on-year.

Technology investment driving innovation, efficiency and excellence

• We have installed the largest contactless payment system on buses outside of London, helping to drive like-for-like commercial passenger growth of 1.3% in the West Midlands.
• Our sophisticated revenue management systems on UK core and Spanish long haul coach routes have helped increase revenue per mile by 6.6% and 1.3% respectively.
• We are accelerating the roll out of smart safety DriveCam technology, which is helping reduce the incidence and cost of accidents.

Targeted expansion through strategic acquisition and new market entries

• We have made 7 acquisitions in the period: 3 in ALSA and 4 in North America, consolidating our presence in existing core markets and expanding in to growth segments.
• In July we won a significant 500 bus contract in Rabat, Morocco. We are now the largest public transport operator in Morocco.
• Our new Geneva, Switzerland operations have grown very strongly, with our first acquisition – AlpyBus – growing revenue by 26.3% and profit by 33% in the first half. New summer tourist services have been launched.
• Significant expansion in US charter and UK employee shuttle services, with new opportunities secured in the rapidly-growing Spanish cruise ship and urban minicab markets.
• A new on-demand bus service due to start shortly in the West Midlands

Enquiries

There will be a presentation and webcast for investors and analysts at 0900 on 26 July 2018. Details are available from Mads Neumann at Maitland. 

Download full announcement in PDF format

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 7 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.

For a full list of definitions, please refer to note 17 to the financial statements.

Legal Entity Identifier: 213800A8IQEMY8PA5X34

Classification: 1.1 (with reference to DTR6 Annex 1R)