Financial highlights
· Group revenue increased 3% to £1.89 billion (2012: £1.83bn), with 7% growth in total non-rail revenue
· Normalised operating profit from core non-rail businesses reached a record £185.5 million (2012: £185.2m)
· Group normalised profit before tax declined to £143.7 million (2012: £164.1m) reflecting the handover of the National Express East Anglia franchise during 2012
· Core non-rail ROCE increased to 11.1% (2012: 10.6%)
· Free cash flow of £182.8 million, over £30 million ahead of target (2012: £140.8m)
· Net debt reduced by over £80 million to £746.1 million (2012: £828.2m). On track to reduce net debt to around 2x EBITDA by the end of 2014
· Full year proposed dividend of 10.0 pence, up 3% year-on-year
Business highlights
· UK Coach express passenger revenue up 7%, with operating margin over 9%
· North America revenue over US$1 billion, up 10%, with almost US$200 million of operating cash generation and Return on Assets ('ROA') target exceeded
· New contracts secured in Spain and Morocco
· Bids submitted for Essex Thameside and Crossrail competitions
· Industry-leading partnership agreed in UK Bus with local transport authority
· c2c achieves industry-leading performance for 2 consecutive years
· £1.8 billion of revenue secured from new markets, including rail contracts and coach services in Germany
· New business pipeline of opportunities worth over £10 billion in revenue
Dean Finch, National Express Group Chief Executive, commented:
"National Express has made important progress in 2013. These results show how we have been able to address the headwinds facing the Group at the start of last year. We beat our targets, especially on free cash flow, and have raised the dividend to reflect our confidence. I am particularly pleased with the strong growth in UK Coach, following its difficult year in 2012, and our performance in North America.
"We also made important strides in business development during 2013. We entered new markets, most significantly Germany. We have won important new contracts and are shortlisted for a number of rail franchises in the UK and Germany. We entered 2014 actively working on a £10 billion pipeline of opportunities."
Outlook
We intend to grow profit across all of our non-rail businesses and develop our rail business by winning new franchises. We will continue to make progress against our three strategic goals. Focused on delivering operational excellence, our coach services in UK and Spain will benefit from continued development of yield management and greater retail distribution. Bus will benefit from our focus on service quality, network improvements and greater use of technology in the UK and further new contract opportunities in Spain and Morocco. North America School Bus will continue to improve its contract portfolio, driving capital returns and selectively adding bolt-on acquisitions and conversion opportunities. All businesses will deliver a minimum 1% real reduction in costs, supported by unchanged hedged fuel prices, driving margin progress across the Group.
With our focus on superior cash generation, we have a robust financial platform which has underpinned an increased dividend to shareholders. In 2014 we are targeting further free cash flow of £150 million. Our strong cash generation and targeted capital deployment will further reduce net debt, improve returns to shareholders and fund our new business development programme. In the last three months alone, we have submitted two rail tenders, successfully bid for two bolt-on acquisitions, begun bus operations in Tangiers and submitted contract tenders in Spain and North America Transit. We expect good progress from our £10 billion pipeline of capital-light bid opportunities, securing new contracts, concessions and business opportunities to enhance shareholder value.
