Full year improvement for National Express
BIRMINGHAM-based public transport group National Express has said it expects continued growth across its bus, coach and rail services during 2015 after reporting a strong 2014.
Latest full year results show both statutory and normalised pre-tax profit were higher than last year, with a strong second half performance more than off-setting the one-off headwinds and currency translation effects that impacted the first half of the year.
The group generated considerable cash receipts and reduced net debt by more than £80m during the course of the year. It said it had also benefited from renewed concessions and had made significant progress in new markets.
The results show group revenue increased 2% to £1.87bn on a constant currency basis; down 1% on a reported basis (2013: £1.89bn). Group normalised pre-tax profit rose 7% to £145.4m on a constant currency basis; up 1% on a reported basis (2013: £143.7m). Statutory group pre-tax profit grew by 3% to £66.5m (2013: £64.4m); up 10% on a constant currency basis.
Earnings per share saw year-on-year growth of 6% to 22.7p (2013: 21.5p). Meanwhile, free cash flow of £190m was £40m ahead of target and higher than last year (2013: £182.8m). Since 2009, National Express has generated £1bn of free cash.
Its full year proposed dividend of 10.3p is up 3% year-on-year (2013: 10p).
Elsewhere, the group said it had seen growth in passenger numbers across every division. The performance of its UK Coach operation was especially strong with passenger revenue up 4% and an operating margin over 10%.
Dean Finch, chief executive, National Express, said: “National Express has made significant progress over the past year. Every division is carrying more passengers and has grown revenue. We have successfully retained key existing contracts, recently won another two rail contracts in Germany and this month started operating our Bahrain bus contract. I am particularly pleased with our very strong cash performance, which has again exceeded our target.
“This strong performance means we are in an excellent position to continue to exploit new opportunities. Our North American business has more than doubled profitability in the last five years and provides us with a strong platform for further growth in the coming years. Coupled with the opportunity for further growth in German Rail and the Middle East, I am optimistic about the future prospects of the business.”
He said that during 2015 the group expected its UK rail, bus and coach businesses to build on their good progress during 2014 and to continue to perform well with strong cash generation. In Spain the main contract renewal process starts this year but any impact from new terms for larger concessions is unlikely to be felt until 2017.
It said while it expected some margin pressure on renewal, it believed its Spanish operation – ALSA – could mitigate this risk through a combination of significant revenue and cost management actions, as well as securing new growth opportunities.
“We are determined to retain a significant market share in Spain and as market leaders have demonstrated our ability to compete effectively. We also expect the group to continue to successfully exploit a number of important opportunities in the Middle East, North Africa and in Germany. We are currently working on an active pipeline worth £8bn of annualised revenues,” he said.
“The benefits from these new opportunities as well as our existing businesses will continue to be reflected in the strong cash generation, with a target of £100m this year. We will continue to focus on margin and ROCE (Return On Capital Employed) improvement and we are not anticipating there to be any exceptional costs from reorganisation or restructuring in 2015. As previously stated, we are changing the accounting treatment of bid costs to be included in normal operating costs.”
