TIDMNEX
RNS Number : 8510X
National Express Group PLC
11 May 2016
11 May 2016
National Express Group PLC
Interim Management Statement
Strong start to the year
National Express Group PLC ("National Express" or "the Group")
today reports its Interim Management Statement for the period from
1 January 2016 to 30 April 2016 ("the period").
Overview
The Group has made a strong start to the year, with total
revenue up 11% in the period on a constant currency basis,
including the benefit from acquisitions and the start of German
rail operations in December 2015. After adjusting for these new
operations, revenue was up 4% on an underlying basis. All divisions
achieved an increase in revenue, supported by total underlying
passenger growth across the Group of 3%. The Group remains on
target to deliver its profit expectation and free cash flow and
leverage targets for the year.
Highlights
Our strategy of consistently focusing on operational excellence
to drive cash and returns, as well as opening up new growth
opportunities, continues to deliver.
Delivering operational excellence
-- Group profit before tax is up year-on-year on a constant
currency basis, despite higher bid costs and a significant increase
in the c2c franchise premium.
-- UK Bus had commercial revenue growth of 3%, with passenger
volumes broadly flat. These results demonstrate that our
partnership-based strategy continues to yield results.
-- 4% underlying revenue growth in UK Coach, which was achieved
despite a notable reduction in passenger numbers immediately
following the terrorist attacks in Brussels in late March. Despite
this, passenger volumes grew by 6% in the period. We expect revenue
growth to recover from this weak April through to the half year,
based on improvements starting to be seen in advance bookings.
-- 7% like-for-like growth in passenger journeys at c2c.
Following a surge in demand after the introduction of a new
timetable in December 2015, agreement has been reached with the
Department for Transport to bring 24 carriages into service later
this year, three years ahead of schedule and at no net incremental
cost to the Group.
-- Passenger growth of 5% and revenue growth of 3% in Spain in
the period, driven by further progress on Revenue Management as
well as new contract wins and the acquisition of Herranz in
December 2015.
-- Morocco saw more than 50 million passenger journeys during
the period, a growth of 11% year-on-year. Our operations in all
four cities grew passengers and revenue and we now carry more
passengers in Morocco than Spain.
-- The North American School Bus bid season is well-progressed
and has continued our very high retention rates, with 96% of
contracts retained to-date. Where contracts have been renegotiated
or renewed we have secured an average rate increase of 5%. This has
resulted in an average increase across the entire portfolio of more
than 3%. North America has had the best start to the year it has
ever enjoyed, in part benefiting from less weather disruption than
previous years.
-- Continued growth in Transit, including securing a three year
extension and $2 million of additional revenue from new routes on
the largest contract acquired as part of the Trans Express purchase
in June 2015.
-- Successful mobilisation of German Rail operations: more than
six million passengers carried already in 2016, in-line with
expectations; punctuality and services operated already ahead of
previous operator's performance with a steady improvement over the
period. Consequently we expect our German rail operations to break
even in the current year.
-- Celebrated first full year of operations in Bahrain, where we
now carry more than one million passengers on our buses every
month.
Creating new business opportunities
-- Completed two acquisitions in North America during the
period, adding 400 school buses (including 170 for special
education contracts), 80 transit vehicles and $40 million of
annualised revenue. These acquisitions have been made for a
combined purchase price of $20 million.
-- UK Bus has signed corporate transport agreements with,
amongst others, Amazon, Jaguar Land Rover and Birmingham
Airport.
-- Progressing with clarification phase of East Anglia bid, on
which a decision is expected in July.
-- Preparing to submit bids in June for Manchester Metrolink and
a German rail bid, both of which are gross cost, capex-light
contracts.
-- We continue to deal with legal and political processes in
respect of the contracts awarded to us in Nuremburg and Porto. We
now do not expect resolution before the second half of this
year.
Generating superior cash and returns
-- We remain firmly committed to our full year targets of free
cash flow of GBP100 million and leverage of 2-2.5 times EBITDA.
Dean Finch, Group Chief Executive, commented:
"I am pleased that we have carried our strong momentum from 2015
into the first third of this year, achieving growth in passenger
numbers and an increase in revenues across all divisions. Our
established businesses continue to grow, year-on-year, and our new
businesses in Germany and Bahrain are already carrying millions of
passengers, through a combination of innovation, partnership and
customer service, underpinned by a relentless focus on operational
excellence. We also believe this experience helps position us well
for other emerging opportunities.
"It is these successes that convince us that our strategy of
diversification into new markets in a measured way, when the
conditions are right, remains the right one. We are building a
business with a balanced risk profile and limited exposure to
individual contracts. In North America, for example, over 90% of
our revenue comes from contracts we have held on average for more
than 10 years and where we wish to retain these contracts, we have
consistently secured a success rate in excess of 95%. We will also
continue to seek out long-term and capex-light opportunities which
meet our strict financial criteria. We remain on track to meet our
full year profit and cash flow expectations."
Enquiries
National Express Group PLC
0121 460
Matthew Ashley, Group Finance Director 8655
Anthony Vigor, Director of Policy and
External Affairs 07767 425822
Louise Richardson, Investor Relations
Manager 07827 807766
020 7379
Maitland 5151
Rebecca Mitchell 07951 057351
There will be a conference call for investors and analysts at
0800 on 11 May 2016. Dial in details are as follows:
UK Toll Number: 02031394830
UK Toll-Free Number: 08082370030
Participant pin: 40873384#
Notes
National Express Group PLC ("National Express" or "the Group")
is a leading international public transport group, operating bus
and coach services in the UK, continental Europe, North Africa,
North America and the Middle East, together with rail services in
the UK and continental Europe.
Underlying revenue and passenger growth, where stated, compare
the current year with the prior year, after adjusting for the
impact of currency, acquisitions and disposals and operations
commenced in new territories within the past year.
Like-for-like passenger growth for the UK Rail division compares
passenger journey numbers in the current and prior year, adjusting
to equalise for the number of days in each rail reporting
period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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