National Express Group PLC
Half Year Results for the six months ended 30 June 2012
National Express Group PLC ("National Express" or the "Group"), a leading international public transport group, operates bus and coach services in the UK, continental Europe/North Africa and North America, together with rail services in the UK.
Operating highlights
National Express has continued to make progress in challenging economic conditions. The first half year saw non-rail profitability maintained despite the considerable headwinds of the previously anticipated loss of UK Government subsidy for Coach concessions and the onset of recession in Spain. As expected, rail profits have fallen following the hand back of East Anglia.
Delivering returns
- Increase in operating margin1 to 11.3% (2011: 10.5%)
- UK Bus margin and profit continue to grow
- Strong operating cash generation, with 125% conversion of operating profit
Managing in uncertain times
- Stable profit in Spain, despite challenging economic environment and localised industrial action, with excellent cash collection. Expansion of bus operations in Morocco, renewal of Granada bus station concession and acquisition of a concession in Bilbao
Pursuing growth
- North America has grown profit and enjoyed another successful bid season with a retention rate of 97% and new bid wins of 1,300 buses (2011: 1,000)
- Integration of the Petermann acquisition progressing smoothly and the business is performing well
- Acquisition of Transit businesses in North America with annual revenues of $30 million and a bid pipeline of $130 million now established
- Successful prequalification for Essex Thameside and Great Western, plus four German rail routes
Financial highlights
- Underlying Group revenue up 3%
- Group operating profit of £105.5 million, with non-rail operating profit broadly flat at £90.0 million
- Group profit before tax down £13.5 million to £82.0 million, reflecting the end of the East Anglia rail franchise
- Statutory profit of £32.1 million
- Group basic earnings per share (EPS) of 12.6 pence, with non-rail EPS maintained at 10.0p
- Group net debt increased by £196.0 million during first half year to £829.7 million, reflecting acquisitions and the East Anglia rail handover, with gearing in line with Board policy at 2.47 times EBITDA
- Interim dividend increased by 5% to 3.15 pence.
Financial summary
|
Half year ended 30 June |
2012 |
2011 |
Change |
|
|
Revenue (£m) |
Non-rail |
808.9 |
783.8 |
+3% |
|
Rail |
125.2 |
335.1 |
-63% |
|
|
Group |
934.1 |
1,118.9 |
-17% |
|
|
Group operating profit (£m) |
Non-rail |
90.0 |
90.5 |
-1% |
|
Rail |
15.5 |
27.1 |
-43% |
|
|
Group |
105.5 |
117.6 |
-10% |
|
|
Share of results from associates (£m) |
0.5 |
0.5 |
- |
|
|
Net finance costs (£m) |
(24.0) |
(22.6) |
+6% |
|
|
Profit before taxation (£m) |
82.0 |
95.5 |
-14% |
|
|
Statutory profit for the period (£m) |
32.1 |
54.7 |
-41% |
|
|
Group operating margin |
11.3% |
10.5% |
+80bp |
|
|
Net debt (£m) |
829.7 |
635.3 |
+194.4 |
|
|
Basic EPS (pence) |
Non-rail |
10.0 |
9.9 |
+1% |
|
Rail |
2.6 |
4.2 |
-38% |
|
|
Group |
12.6 |
14.1 |
-12% |
|
|
Interim dividend per share (pence) |
3.15 |
3.00 |
+5% |
Trading comment
Dean Finch, National Express Group Chief Executive, commented:
"The first half of 2012 has seen a resilient underlying performance across the Group, considering the headwinds we have faced. This reflects a reassuringly stable performance in Spain, accompanied by good growth in UK Bus and North America, with lower profits in our Rail and UK Coach businesses, as expected.
This trend is expected to continue in the second half of the year, with further progress from UK Bus and our recent North America acquisitions. UK Coach will still face headwinds but should progressively mitigate concession funding changes. ALSA's flexible operating model and experienced management team is best placed to cope with the uncertainties presented by the economic crisis in Spain. Across the Group, we continue to drive operational efficiency, cost control and incremental revenue growth, focusing on improving returns on invested capital and creating long term economic value for shareholders.
Looking further ahead, we have a pipeline of emerging opportunities across the portfolio of businesses, building on organic growth, as well as new contract bid prospects in rail, bus and school bus services. Our new North American transit business and emerging opportunities in Continental Europe will support this. National Express owns and operates some high quality assets in a number of different markets and is well placed to exploit the emerging opportunities in these difficult times and continue to grow the business."
