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National Express (NEX)

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Tuesday 01 May, 2012

National Express

Interim Management Statement

RNS Number : 4202C
National Express Group PLC
01 May 2012



Press release


1 May 2012


National Express Group PLC

First Quarter 2012 Interim Management Statement


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


National Express reports its Interim Management Statement for the three months ended 31 March 2012 ("the quarter" or "the period").




· Good revenue growth, including Spain, North America school bus, UK Bus and UK Rail

· New contract wins in Spain and North America school bus

· Added growth through small bolt-on acquisitions in Spain and in North America school bus and para-transit

· Successful pre-qualification for two UK rail franchise tenders

· As expected, UK Coach profit reduced by subsidy removal but core network continues to grow

· Group trading in line with the Board's expectations


Dean Finch, Group Chief Executive, commented:


"We aim to offer customers reliable, well run services at exceptional value prices. This strategy, supported by fleet investment, strong cost control and continuously improving our network of services, is enabling us to deliver good revenue growth across the business, win additional contracts and expand into new markets."



Alsa has continued to achieve good revenue growth. In local currency, regular intercity coach revenue grew by 5% year-on-year. This was driven in particular by passenger volume growth on Madrid radial routes and in Northern Spain, reflecting competitive fares, particularly against rail, benefitting our customers during continued austerity. Revenue in the urban bus operation in Spain grew 4% whilst Morocco grew 9%, reflecting the start-up of an additional contract in Agadir. Total divisional revenue was 1% higher, with continuing weak non-transport revenues.


In addition to the new Moroccan contract, Alsa successfully renewed its concession to operate the Granada bus station. At the end of March, Alsa acquired an additional urban bus concession in Bilbao; adding 150 vehicles to an existing local operation, we are targeting for this to be profitable in its second year.

North America

School bus revenue grew by 6% year-on-year in local currency, reflecting last year's new contracts and further charter growth. The 2012/13 bid season has started successfully, with ten new contracts secured from competitors, offset by five given up. A small acquisition was completed in March adding 300 buses. Conversion activity is progressing, with one new contract already secured. Notably, our service quality and referred experience are proving important in winning bids. In total, we have secured over 400 net new buses for the next school year.


We acquired a small para-transit business at the end of the period. With the completion of the Petermann acquisition now imminent, including the divestment of just over 10% of acquired revenue as agreed with regulatory authorities, this provides a good platform for further growth in both the school bus and para-transit markets.


UK Bus

Commercial revenue in UK Bus remains strong, growing by 4% year-on-year. Passenger volume was unchanged on a like-for-like basis, while student travel card sales continued to grow strongly. Encouraging passenger growth has particularly been seen on routes benefitting from recent fleet investment; the first half of 2012 will see 160 new buses added to the fleet, with funding for a further 31 hybrid vehicles recently secured from government. In addition, the benefits of a detailed network review, with new routes in Dundee and Coventry, and a significant improvement in punctuality, resulted in an increased operating profit in the quarter, together with overall divisional revenue up 2%. We have also agreed the basis for the concessionary reimbursement scheme for the forthcoming financial year with the West Midlands Integrated Transport Authority (WMITA), which will protect future income.


UK Coach

Our challenge in 2012 is to begin to mitigate the lower profit caused by the loss of £15 million of annual concession revenue, withdrawn by the Government in November 2011. Initial progress following the launch of the Group's own concession card programme has been slower than expected, with total concessionary revenue down £2.8 million year-on-year, a reduction of 40%. Nevertheless, concessionary card sales are growing, with 100,000 cards now sold, and the scheme has recently been extended to include airport routes, doubling the weekly rate of card sales.


On a like-for-like basis, revenue on the core express network grew 5%, including 3% volume growth reflecting increased schedule frequency. We continue to drive efficiency and investment in the customer offering, with the biggest network review in 25 years, four new route start-ups, and the introduction of a new simple pricing regime across key routes, offering very competitive headline on-the-day and 14-day advance fares. This is also being supported by growth outside the express business, most notably in Eurolines.


UK Rail

Revenue at c2c grew strongly, increasing by 10% in the quarter. c2c improved its punctuality performance measure further during the period and remains the top performing operator in the country with a 96.8% annual average punctuality.


The handover of the East Anglia franchise was successfully completed in February 2012, with franchise revenues of £56 million delivered in the current year. On 29 March 2012, the Department for Transport announced that National Express had qualified to bid for both the Great Western and National Express's existing Essex Thameside (c2c) franchises. Invitations to tender are currently awaited. The Group's bid team is exceptionally well placed to submit high quality and innovative tenders, based on our experience and expertise.

Financial Position

National Express continues to benefit from long-term, stable funding and investment grade credit ratings. The Group is investing in its consistent, stable fleet replacement plan, which preserves a low fleet age and provides flexibility to manage future investment needs, whilst promoting greater passenger travel.


Cash outflows in the period included the completed handover of the Group's principal rail franchise, East Anglia, with its commensurate outflow of working capital in the period of approximately £80 million. The Group has also completed all cash payments in respect of its previous ICRRL (Eurostar) and East Coast contracts. In addition, in conjunction with the WMITA, the Group secured an innovative insurance buy-in of pensioner liabilities of the West Midlands Bus pension fund, significantly reducing future expected pension fund volatility and fixing existing cash deficit contributions until 2017.


These actions collectively allow the Group to focus on its growth and further margin improvement plans, leading to an expected sustainable growth in profitability from 2013. The Board is committed to maintaining a net debt gearing ratio of 2.0 to 2.5 times EBITDA and a progressive dividend policy supported by non-rail earnings and cash.





National Express Group PLC   

Jez Maiden, Group Finance Director


0121 460 8657

Stuart Morgan, Head of Investor Relations


Anthony Vigor, Director of Policy and External Affairs  

07767 425822  


020 7379 5151

Neil Bennett   

George Hudson

Rebecca Mitchell


There will be a conference call for investors and analysts at 0900 on 1 May 2012. Details are available from Laura Dean at Maitland.



All references to revenue and operating profit are measured 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, disposals and rail franchises no longer operated.


Profits are stated on a normalised basis. Normalised results are the statutory result excluding profit or loss on the sale of business, exceptional profit or loss on sale of non-current assets and charges for goodwill impairment, intangible asset amortisation, exceptional items and tax relief thereon, for continuing operations. The Board believes that the normalised result gives a better indication of the underlying performance of the Group.


Like-for-like sales in UK Bus measure commercial passenger revenue, net of network mileage changes. In UK Coach, like-for-like sales measure commercial passenger revenue, excluding concessionary passengers and the impact of new routes.


This information is provided by RNS
The company news service from the London Stock Exchange