Friday 24 February 2017

Nat Ex Full Year Results

National Express show a good set of results claiming "Strong growth from our diversified portfolio of businesses"

The more diversified portfolio has delivered strong performance in 2016, with both revenue and profits up on a constant currency and statutory basis, improving returns and strong cash generation, and a growing dividend.

The group has seen particularly strong growth in overseas markets both from acquisitions and organically. Entering  2017, they see the benefits from the successful refinancing of their bond, the full year effect of acquisitions and lower fuel costs.
They claim "a clear strategy for growth and remain focused on disciplined capital allocation, with a strong pipeline of opportunities for 2017 and beyond. The strength of our business, coupled with the removal of our c2c franchise commitments, means we are both raising our annual free cash flow guidance to £120 million and we propose a 10% increase in the final dividend"

On February 10th Nat Ex completed the sale of c2c to Trenitalia. The results shown below from continuing operations, exclude the contribution from the UK Rail division in accordance with IFRS.


Focus on operational excellence continues to deliver results
  • Strong growth in North America, with revenue and operating profits up 14.3% and 11.9% on a constant currency basis, with another successful bidding season
  • Record passenger numbers in Spain and Morocco, supporting revenue growth of 5.7% and operating profit growth of 5.3%, both in constant currency
  • Good performance from UK Coach and resilient results from UK Bus in challenging market conditions
  • First full year of German rail operations, carrying over 20 million passengers and delivering operational improvements relative to the previous operator
  • Strong growth in passengers in c2c, up 6.7%, well ahead of average for London and South East, delivering revenue growth of 5.7%
  • All three UK businesses awarded the British Safety Council Sword of Honour, while ALSA has received the prestigious Prince Michael International Road Safety Award for its ‘Driving out Harm’ campaign in Morocco
  • UK Coach joins c2c with EFQM 5-star rating

Continuing to deploy technology to drive efficiency and growth and raise standards
  • New real-time active revenue management systems fully installed in UK and Spanish coach businesses, with positive early signs, helping to drive revenue, profit and incremental growth in 2017
  • Continued investment in new mobile websites and ticketing apps to drive higher online transactions, conversion rates and lower costs
  • Contactless payment being enabled in UK Bus in 2017
  • Continuing to roll out Lytx DriveCam technology across the businesses, helping to deliver a reduction in collisions and associated costs
  • Launch of a new free ‘infotainment’ system, VUER, in UK Coach, building customer loyalty and driving higher levels of customer satisfaction; being tested in UK Bus

Growing through new business opportunities including bolt-on acquisitions
  • Completed 11 acquisitions in the year, all of which will provide earnings within the first 12 months:
    • 8 bolt-on acquisitions in North America, adding 1,100 school buses and 450 transit vehicles, with Ecolane, a paratransit planning and scheduling software provider delivering new contract wins since acquisition
    • 2 acquisitions in ALSA: 1 regional bus business giving us entry into Ibiza; and, 1 private hire transfer operator in Switzerland, providing entry to the lucrative ski and alpine tourist market and platform for expansion in complementary markets
    • Acquisition of Clarkes in UK Coach, building commuter business and providing entry into the in-bound tourist market
  • North American acquisitions made in 2015 delivered an average ROIC of between 15% and 20%
  • Submitted bids to operate the Casablanca Tramway and Singapore urban bus
  • Actively looking at a number of attractive growth opportunities
  • Disposal of c2c to Trenitalia, freeing up capital for investment in higher growth markets
Dean Finch, National Express Group Chief Executive said:
“We have again delivered a strong set of results from our diversified group of international businesses and remain confident for our future prospects. Our focus on operational excellence is helping drive organic growth across the Group, and this is being complemented by significant returns from our recent acquisitions. We carried a record 921 million passengers in 2016 and will continue to invest in new technology to deliver ever-improving services to our customers.

“With the recent sale of our c2c franchise, we have further opportunity to invest in our fastest growing markets which deliver strong returns, but we will continue to do so in a disciplined manner. We have developed a strong track record and team in identifying and completing acquisitions that generate significant value and we have identified a strong pipeline of further opportunities. Our confidence in the future is demonstrated by the increase in our annual free cash flow guidance to £120 million and the proposed 10% increase in the final dividend.”