TIDMNEX
RNS Number : 6826V
National Express Group PLC
30 October 2014
30 October 2014
National Express Group PLC
Interim Management Statement
National Express Group PLC ("National Express" or "the Group")
is a leading international public transport group with bus, coach
and rail services in the UK, Continental Europe, North Africa and
North America. It today reports its Interim Management Statement
for the period from 1 July 2014 to date ("the period").
Overview
During the period, the Group has continued its strong progress.
Profit before tax in the third quarter was nearly 15% higher than
the same period last year, progressively recovering the one-offs
and currency translation impacts experienced in the first half of
the year through the delivery of revenue growth, performance
improvements and cost efficiencies. We are on target to meet our
profit and cash expectations for the full year.
Notable achievements have included:
-- We have won new contracts and retained key concessions:
-- Won a 10-year contract to run bus services in Bahrain,
opening up the Middle East region for further growth;
-- Retained and grown our largest Spanish concession to have
come up for renewal so far - a EUR600 million total revenue
contract for regional coach services in the Bilbao metropolitan
region for up to 15 years;
-- These achievements are built on the important successes
earlier in the year, including: the retention of the 15 year, GBP4
billion Essex Thameside ('c2c') rail franchise; renewal of our
largest US Transit contract ('The Ride' para-transit services in
the Boston area); retention and significant growth of our Memphis
School Bus contract, becoming our largest contract in the US;
successfully commissioning our new Moroccan bus franchise in
Tangiers.
-- We have grown passenger numbers and revenue in every division this year:
-- UK Bus has delivered 4% total revenue growth in the period and 3% year-to-date;
-- Revenue is growing in Alsa with the successful roll out of
revenue management in Spanish coach operations. Passenger volumes
are now growing on all but one of the rail competed corridors and
revenue has now recovered to the prior year level, delivering rapid
progress;
-- UK Coach has continued to build on last year's success,
carrying 5% more passengers in the core express network year to
date;
-- North America has grown its number of routes, on the back of
98% targeted contract retention in the recent bid season;
-- UK Rail has grown both revenue and passenger numbers and is
well advanced on new franchise mobilisation.
-- We continue to focus on driving strong cash generation and capital discipline:
-- We are on course to deliver our full year free cash flow
target of GBP150 million, delivering nearly GBP500 million between
2012 and 2014;
-- We are deploying capital selectively to protect and grow the
business, investing in over 250 new buses over the next 12 months
in UK Bus;
-- Our core diversified markets limit exposure and provide good growth potential;
-- We will continue to focus on cash generation in the coming
years, developing capital light opportunities, reinvesting
selectively in growth projects and driving shareholder value.
Dean Finch, Group Chief Executive, commented:
"We have made good progress this quarter. We have won new
contracts, renewed key concessions, and increased revenues in every
division. Our profit last quarter was up on the same period in
2013, helping to offset the one-offs of the first half year. Our
cash generation continues to be strong and will remain a focus for
the business.
"This quarter again demonstrates that our strategy, rooted in
excellent operational performance and customer service, is
delivering retention and progression in our existing markets and
securing expansion in to profitable new business. It is an approach
we are determined to build on as we look at other opportunities in
the coming months and years."
UK Bus
The UK Bus division performed strongly in the period with growth
in both revenue and profit. Commercial revenue grew by 4% in the
period, with concessionary revenues 3% higher, and passenger
numbers up 1% in the year to date. We are delighted that our
pioneering partnership with Centro - especially through our
'Transforming Bus Travel' agreement - won the Transport Partnership
of the Year at the recent National Transport Awards. This agreement
provides a stability that has delivered record rises in passenger
satisfaction measured in recent Passenger Focus surveys and
encourages us to invest - we will replace more than 250 vehicles
over the next 12 months.
Again, working closely with Centro, we are leading the industry
with our partnership on smartcards. We have already seen revenue
growth following the successful transition of multi-operator
tickets to smartcards, and are progressively rolling out new ticket
types onto our 'Swift' card. We believe that the growth of
smartcards, and the improved customer data that they bring, will
continue to be a key driver of revenue growth and customer
satisfaction.
UK Bus has also increased sales of student travel products,
implemented a JobCentre programme to assist job seekers and is
growing its contract services - securing Commonwealth Games
services, Coventry City FC travel and a tender for the new Jaguar
i54 plant during the period. We are also progressively replacing
the Midland Metro fleet with brand new, longer trams.
UK Coach
UK Coach continues to grow passenger numbers and revenue. A good
summer performance saw core express passenger numbers rise 2% in
the period. With last year's major distribution wins now fully
embedded, year to date core express revenue is up 5%. Building on a
successful distribution partnership with the UK university
admissions service, UCAS, we have added more university
destinations.
UK Coach is also winning new contracts. We have signed a new
distribution agreement with easyBus to utilise our core express
services and are progressing a number of growth and contract
opportunities in our airport business. The Kings Ferry has expanded
its contract operations - including running services for the recent
NATO summit in Wales - and is working closely with the UK Bus
business to utilise spare fleet on contract wins.
Having reviewed the initial performance of our German Coach
operation through its second summer, we concluded that pricing and
volume were likely to remain unattractive and therefore
discontinued these services.
Rail
Rail revenue has increased 5% year to date. c2c has maintained
its industry-leading punctuality performance at 96.3%. Our
leadership of the DfT's smartcard project has seen c2c launch smart
season tickets into London, following the successful roll out of
day and off-peak tickets earlier this year.
Mobilisation plans for our new franchises are at an advanced
stage and on target. The new Essex Thameside franchise for c2c
starts on 9 November, with revenue initiatives and new customer
information systems ready to launch. In Germany, the Rhine
Münsterland Express will commence operations in December 2015 and
we expect profitability to be ahead of plan. The first trains have
already been delivered. We were disappointed not to be awarded the
ScotRail franchise, after a very competitive bid that lost on the
narrowest of margins, but we have an active pipeline of further
rail opportunities in the UK and Germany.
North America
Our North America business has been successful in securing
profitable contracts, delivering high customer service and then
retaining those contracts at bid renewal. The Memphis conversion
contract is now our largest School Bus contract, growing three-fold
on renewal this summer. The new contract started successfully in
early August, helping drive 3% underlying revenue growth in North
America in the period.
Similarly, the renewal and expansion of our largest Transit
contract, providing para-transit services in the Boston area, has
seen this 2011 acquisition almost fully paid back in cash
generated. The renewal has been secured at a typical margin level
for the market. We have also added an additional contract in
Arizona during the period.
Year to date revenue is up over 1%. After the adverse revenue
impact of the exceptional weather earlier in the year and our focus
on increasing returns by exiting under-performing contracts,
revenue is growing, driven by our success in winning new contracts,
securing pricing improvements in existing contracts and through
organic growth in existing routes. As a result, good progress is
being achieved in recovering the adverse profit impact of the
severe weather.
Spain
In Spain, domestic passenger volume was up 1%, reversing the
earlier adverse trend. Intercity coach performance was particularly
good, with improved consumer confidence evident and continued
success from the roll out of revenue management on rail-competed
routes - on the latter, average passenger volume was 2% higher in
the period than the prior year and revenue has recovered to the
prior year level.
Success in new wins and in contract retention continues.
Start-up of the Tangiers concession drove Morocco revenue growth of
almost 30% in the period. In the Basque region, Alsa renewed the
Bizkaia concession, its second largest revenue contract. Acquired
in 2008, Alsa has grown both profit and service level on this
concession, securing Bizkaibus for a further 10 to 15 years. This
emphasises Alsa's success in winning, improving and retaining its
key concessions. Spain also renewed a maintenance contract for 179
buses in Mallorca for a further 5 years. We continue to see new
contract opportunities in Spain and Morocco.
International development
Building on our Moroccan successes, in September we secured a
contract to operate the Bahrain bus service, in joint venture with
a local partner. The joint venture will operate 141 buses over a
10-year contract without passenger revenue risk, with further
growth potential. This contract also opens up the Middle East for
further expansion and we have already been shortlisted for another
contract in the region.
Financial position
Net debt at the end of September was GBP50 million lower than in
September 2013 and we remain on track to deliver our target free
cash flow of GBP150 million in 2014. We are deploying capital
selectively to protect and grow the business, investing in
replacement fleet as required. We will continue to focus on cash
generation in the coming years, developing capital-light
opportunities, reinvesting selectively in growth and driving
shareholder value.
The Group will announce its results for the 12 months to 31
December 2014 on 26 February 2015. There is no scheduled trading
update before that announcement.
Enquiries
National Express Group PLC
Michelle Dovey, Director of Capital Markets 07767 603386
Anthony Vigor, Director of Policy and External Affairs 07767 425822
Maitland
Nathalie Falco 020 7379 5151
Notes
Unless otherwise indicated, revenue is stated on an underlying
basis, which compares the current year with the prior year on a
consistent basis, after adjusting for the impact of currency,
acquisitions and disposals. In UK Bus, commercial revenue is that
from fare-paying passengers and excludes concessions and contracted
services. In UK Coach, core express revenue is that from the
scheduled National Express network.
The c2c Public Performance Measure (PPM) of punctuality is
stated on a moving annual average basis to 11 October 2014.
Profit is stated on a normalised basis, before exceptional costs
and intangible asset amortisation (as defined in the press release
for the Half Year results for the 6 months ended 30 June 2014).
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).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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