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Share Name Share Symbol Market Type Share ISIN Share Description
National Express Group Plc LSE:NEX London Ordinary Share GB0006215205 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.40 0.15% 264.20 263.40 264.00 269.60 260.60 264.20 1,740,825 16:35:15
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 2,744.4 187.0 27.6 9.6 1,622

National Express Group PLC Trading Statement

12/11/2020 7:00am

UK Regulatory (RNS & others)


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RNS Number : 0416F

National Express Group PLC

12 November 2020

Trading Update

12 November 2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF EU REGULATION 596/2014.

Overview

-- The trend of improving revenue performance has continued, with around 70% of last year's revenue secured in October compared to around 60% in August.

-- We continue to generate positive EBITDA, with October delivering the highest monthly total in 2020 to date.

-- We retain significant liquidity and expect to close the year with around GBP1.5 billion in cash and undrawn committed facilities.

-- Our reputation for operational excellence endures during the pandemic, with further contract wins in recent weeks:

o Further success in Portugal, where we have been provisionally awarded a 200 urban bus contract in Porto, complementing our previously announced 240 bus contract in Lisbon;

o In the UK we have won: a major employee shuttle contract; and, our first accessible transport contracts outside the West Midlands.

Group financial position

-- With greater clarity on school start-up in North America and the latest government lockdown policies and related support, we reinstate guidance with normalised EBITDA forecast at between GBP170-190 million for 2020:

o Despite our progress, the pace of our recovery has been slower because of the impact of the second wave of infections and the associated lockdowns;

o However, even at the bottom of this range, we would pass all covenant tests at 31 December 2020 with ample headroom.

-- We have passed the seasonal third quarter 'peak debt' (where we incur the costs of North American School Bus start-up with limited revenue) and generated positive EBITDA and cash flow in October which we expect to continue throughout the balance of the year.

-- We expect to close the year with around GBP1.5 billion in cash and undrawn committed facilities.

-- Fitch recently reaffirmed our investment grade rating (BBB) whilst maintaining the outlook at negative in line with their views on the transport sector as a whole.

Divisional operating highlights

ALSA

-- ALSA continues to benefit from its strong customer relationships and contractual protections, such as no revenue risk in over 40% of contracts (principally 60% of regional and 100% of urban). This figure will grow closer to 50% by the end of 2021 as recent new contracts are mobilised:

o In October our urban services proved their on-going resilience, with 60% patronage on 100% of mileage.

-- Beyond the contracts with revenue protection, we have seen the recent tightening of lockdown policies affect Spanish long haul and regional coach passenger numbers, which are currently running at 15-20% of last year:

o Before this recent second wave tightening, across all of our services we saw a strong return of demand, with patronage at 65% of last year in September;

o We have liaised closely with customers and reduced service in-line with lower demand, with our long haul coach services now running at 20% of their pre-Covid level ;

o We continue to use the Spanish government's ERTE furlough scheme to protect cash flow. This scheme has been extended into 2021, allowing us to continue varying employee numbers in-line with changes in customer demand.

-- In Morocco, we have seen a rapid bounce back in passenger numbers in four of our six contracts. In Casablanca and Rabat - our newest and largest contracts - patronage is running higher than the same period last year:

o We continue to work closely with customers and local authorities to manage contract terms and costs.

-- We have been provisionally awarded a seven year, over GBP112 million revenue, contract to operate 200 urban buses in Porto. This is a 'gross cost plus' contract, with a small proportion of our income dependent on the level of passenger revenue secured. This complements our previous success in Lisbon and we expect that both contracts will start next year.

North America

-- We are currently operating services on 75% of our school bus routes, either through full 'traditional' (five days-a-week) or 'hybrid' (a mix of in-school and at home learning) arrangements:

o This situation appears to have stabilised with limited expectations of the remaining 25% of routes returning to school in 2020.

-- Working closely with customers, we have secured around 80% of our pre-Covid school bus revenue:

o We continue to closely manage costs including laying off drivers where customers have not provided payment. We expect the majority of these lay-offs to be temporary, with employees recalled once service resumes.

-- In both our Transit and Shuttles businesses, we maintain similar positions to that set out in our 24 September 2020 Trading Update:

o Transit continues to secure between 65% and 80% of pre-Covid revenue;

o In Shuttle our particularly strong customer relationships continue to underpin revenue collection, at around 80% of pre-Covid levels.

UK

-- Our UK bus business continues to benefit from government support, fully underwriting the cost of operating service. Patronage levels have also proved resilient:

o As we entered the second lockdown in England, West Midlands bus continued to operate 103% of last year's service, with around 60% of the patronage;

o In Dundee - where a tiered system remains in place - we are operating around 90% of last year's service, with around 60% of the patronage;

o National Express Accessible Transport has won two contracts in Warwickshire, broadening out from its West Midlands base.

-- From 9 November we temporarily reduced our UK coach network to around 9% of last year's service, reflecting the restrictions of England's second lockdown:

o To further protect cash flow, we have again placed a large majority of staff on the government furlough scheme;

o Before the latest round of restrictions, demand had returned encouragingly with 51% of service operating at nearly 80% occupancy rate;

o National Express Transport Solutions has recently won a major employee shuttle contract worth GBP5 million revenue during the remaining months of 2020.

Ignacio Garat, Group Chief Executive, said:

"In my first weeks in the Group, I have been struck both by my colleagues' professionalism, and by the resilience of our leading portfolio of businesses. The positive vaccine news of the last few days may signal a faster service recovery in the medium term than we had hitherto envisaged. Nonetheless, these remain difficult times for the public transport sector, at least in the short term. I am convinced, however, that National Express will continue to weather the challenges we face and has strong foundations in place to prosper once the pandemic is over.

"I am pleased by the strength of our relationships with customers and governments across the Group. This is reflected in the amount of support we have and continue to receive. We will continue to proactively engage customers and relevant authorities to navigate the challenges the pandemic presents. Alongside this, we will continue to closely and carefully manage costs and remain very disciplined in the returns we seek on investment, as part of our broader focus on maintaining the Group's financial position.

"National Express will retain its focus on safety, operational excellence and being an employer of choice, values that have underpinned its success in recent years. Fundamentally, National Express is a service company and we will redouble our efforts and programmes to make sure every customer's experience is outstanding. These attributes will help us navigate the pandemic and ensure National Express retains and extends its market leading position and drive our future growth."

About National Express

National Express is a leading mass transit provider with bus, coach and rail services in the UK, North America, continental Europe, North Africa, and the Middle East.

Enquiries

 
 National Express Group PLC 
 Chris Davies, Group Finance Director              0121 460 8655 
 Anthony Vigor, Director of Policy and External 
  Affairs                                          07767 425822 
 Louise Richardson, Head of Investor Relations     07827 807766 
 
 Maitland/AMO 
 Neil Bennett                                      020 7379 5151 
 James McFarlane                                   07584 142 665 
 

Notes

Legal Entity Identifier: 213800A8IQEMY8PA5X34

Cautionary statement

Information set forth in this announcement may contain certain 'forward-looking statements' with respect to National Express Group PLC ('Company' or 'Group') and the Group's financial condition, results of its operations and business, and certain plans, strategy, objectives, goals and expectations with respect to these items and the economies and markets in which the Group operates.

Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'will', 'would', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal' or 'estimates' or, in each case, their negative or other variations or comparable terminology. Forward-looking statements are not guarantees of future performance. By their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many of these assumptions, risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely. There are a number of such factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the political conditions, economies and markets in which the Group operates (including the outcome of the negotiations to leave the EU); changes in the legal, regulatory and

competition frameworks in which the Group operates; changes in the markets from which the Group raises finance; the impact of legal or other proceedings against or which affect the Group; changes in accounting practices and interpretation of accounting standards under IFRS, changes in interest and exchange rates and the evolution of the Covid-19 pandemic and government and public health body measures taken in response to it and passenger travel habits exhibited in response to it.

Any forward-looking statements made in this announcement, or made subsequently, which are attributable to the Company or any other member of the Group, or persons acting on their behalf, are expressly qualified in their entirety by the factors referred to above. Each forward-looking statement speaks only as of the date it is made. Except as required by its legal or statutory obligations, the Company does not intend to update any forward-looking statements.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

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November 12, 2020 02:00 ET (07:00 GMT)

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