All round improvement at National Express

National Express (NX) reports that profits and margins improved in all five of its main operating divisions for the year ended 31 December 2015.

Group revenue was 2.8% up at £1.92bn (2014: £1.87bn), and normalised group operating profits increased 15.8% to £193.5m (2014: £167.6m). Normalised group profit before tax was 25.2% up at £150.1m (2014: £119.9m). (‘Normalised’ refers to exclusion of exceptional items – like the cost of rail bids – which otherwise would distort the figures).

Net debt increased 12.2% to £745.5m (2014: £664.3m), mainly due to acquisitions and capital expenditure. However, net finance costs fell to £45.2m (from £48.0m). Return on capital employed (ROCE) improved from 10.7% to 11.7%, and a dividend increase of 10% has been proposed.

NX has five main operating divisions:  UK Bus; UK Coach; UK Rail; North America; and Spain & Morocco. North America, which runs school buses, is the largest sector and accounts for 36% of total turnover; Spain & Morocco, which dominates the road passenger sector, is the second largest and accounts for 26% of group total turnover. Combined, these two divisions now make up more than half total group turnover.

UK Bus: NX bus activities are mainly confined to the West Midlands and Dundee (Tayside). Revenue increased 1.9% to £286.4m (2014: £281.0m); operating profit was 10.3% up at £37.5m (2014: £34.0m), and the operating margin improved from 12.1% to 13.1%. Like-for-like commercial revenue grew by 3% but concession revenue fell 1% (reflecting local authority cutbacks).

UK Coach: Revenue increased 2.2% to £281.2m (2014: £275.2m); operating profit was 15.4% up at £32.3m (2014: £28.0m), with the operating margin improving from 10.2% to 11.5%. Passenger volumes increased by 2%; and passenger yield by 1%.

UK Rail: c2c is NX’s only remaining rail passenger franchise. The current arrangement stems from November 2014 and runs for 15 years. Revenue was 11.1% up at £168.4m (2014: £151.6m). Operating profit was £0.6m (2014: £10.1m loss), and the operating margin improved to 0.4% from minus 6.6%. The figure reflects the inclusion of rail bid costs (previously treated as exceptional items and excluded). Passenger growth was up 5.3%; peak revenue improved 8% (nearly twice the L&SE average) and weekend revenue increased by 15%.

NX initiated its first rail operations in Germany in mid December after having secured contracts to provide services in Nord Rhine Westphalia, though these started too late to affect the above results.

SERCO: The British outsourcing company also released its results for the year ended 31 December 2015. Unfortunately the transport results are not disaggregated from the non transport ones, though the results for Northern Rail (a 50:50 joint venture with Abellio) are shown separately.  Northern Rail revenue increased 1.4% to £585.3m (2014: £577.5m), and the operating profit was 9.6% up at £19.4m (2014: £17.7m). Serco-Abellio has operated the franchise since December 2004 but Arriva takes over in April with a new nine year franchise.

Serco-Abellio also has a 25 year joint venture for Merseyrail (2003-25), and Serco was awarded a 15 year contract to run the Caledonian sleeper service, operational since April 2015. These results for these undertakings are not available.


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