Trusted Through Testing Times Our Purpose Guides Everything We Do
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Annual Report 2020 Trusted through testing times Our Purpose guides everything we do Our Vision is to be the world’s premier mass transit Our Purpose is to lead the modal shift to mass operator with services offering leading safety, transit by providing safe, reliable and great reliability and environmental standards that value services on clean and green vehicles. customers trust and value. Our Purpose shapes our strategy Read more on pages 16 to 17 – strategic imperatives And is underpinned by our enduring values which shape our culture Read more on page 48 Our Belief is that driving modal shift from cars to high quality mass transit is fundamental to a clean, green and prosperous future. This ensures consistency of delivery for all our stakeholders Read more on pages 44 to 45 And sets a high ambition for stewardship of the environment and the societies in which we operate Read more on page 48 Our Purpose is to help lead this modal shift by making mass transit an increasingly attractive option for all our customers whether they are individuals, All of which is reflected in how we reward transport authorities, school boards or businesses. our management We seek to do this by earning our customers’ loyalty Read more on pages 95 to 127 by providing safe, reliable and great value multi- modal services on clean and green vehicles. Strategic Report Strategic Strategic Report 2 At a glance Our Approach is to seek social and environmental 4 Year overview leadership to ensure we are a good employer and partner, 6 Chairman’s statement while using technology to make our services increasingly 8 Introduction to our Group Chief Executive easier to access, safe and efficient. It is this model of 10 Response to Covid-19 12 A rapidly changing market progressive partnership that: delivers industry-leading 14 Our business model services for our customers and communities; secures 16 Our strategy and priorities rewarding careers for our people; and generates sustainable 18 Key performance indicators 20 Operating review returns for our shareholders. 22 Financial review 28 Divisional review: ALSA 30 Divisional review: North America Corporate Governance Corporate 33 Divisional review: UK and Germany 36 Risk management 38 Principal risks and uncertainties 42 Viability and going concern 43 Non-financial Information Statement 44 Stakeholders 46 Our Section 172 statement 48 Environmental, Social and Governance Corporate Governance 56 Chairman’s introduction to corporate governance 58 Corporate governance framework 59 Board of Directors 62 Board activity in 2020 64 Purpose, Vision, Values and culture Statements Financial 67 Stakeholder relations 73 Roles and responsibilities 76 Nominations Committee Report 83 Audit Committee Report 90 Safety & Environment Committee Report 95 Annual Statement by the Remuneration Committee Chair 104 Directors’ Remuneration Policy Our measure of Success is being seen by 2030 as the 113 Annual Report on Remuneration world’s premier mass transit transport partner, with a 128 Directors’ Report 134 Directors’ Responsibilities reputation for industry-leading safety, reliability and value for Financial Statements money across a portfolio of easily accessible multi-modal 135 Independent Auditor’s Report services. At the forefront of technological innovation, 143 Group Income Statement Additional Information National Express will lead the transition to zero emission 144 Group Statement of Comprehensive Income vehicles, maintain its safety leadership and pioneer new 145 Group Balance Sheet 146 Group Statement of Changes in Equity ways to access transport. Our staff will see us an employer 148 Group Statement of Cash Flows of choice and customers will rely on us as an operator they 149 Notes to the Consolidated Accounts can trust, with services that help meet their needs while also 222 Company Balance Sheet 223 Company Statement of Changes in Equity having a positive impact on their communities. This will, in 224 Notes to the Company Accounts turn, drive strong, consistent returns for our shareholders. Additional Information The challenges which Covid-19 has presented in 2020 have 237 Five Year Summary 238 Environmental performance not changed our ambition or approach. We will continue to 241 Shareholder information champion modal shift, meeting the continued demand for 242 Definitions and supporting information safe and sustainable mass transit solutions. 243 Alternative performance measures Financial Calendar 2021 Key contacts and advisers Cautionary statement National Express Group PLC Annual Report 2020 1 At a glance National Express at a glance National Express is a leading international public transport operator, diversified internationally and by business area. Revenue breakdown by territory Canada United Kingdom Germany £62m £388m £139m 2019: £77m 2019: £600m 2019: £90m Student transportation Regional/long haul coach Rail Transit and paratransit Urban bus Switzerland Charter and other Charter and other £13m 2019: £14m Charter and other Urban bus USA Spain £807m Morocco £459m 2019: £1,153m Bahrain* 2019: £746m £87m Regional/long haul coach Student transportation Urban bus 2019: £65m Urban bus Transit and paratransit * Joint venture business Charter and other Charter and other Urban bus reported through associates Summary financials 2020 IFRS basis Underlying basis 2020 2019 2020 2019 £m £m £m £m Revenue 1,955.9 2,744.4 1,955.9 2,744.4 Operating (Loss)/Profit (381.4) 242.3 (50.8) 295.3 (Loss)/Profit before tax (444.7) 187.0 (106.1) 240.0 (Loss)/Profit for the year (326.7) 148.3 (76.8) 184.8 Basic (Loss) / earnings per share (pence) (57.9) 27.6 (14.6) 34.5 Net cash flow from operating activities (96.7) 356.2 EBITDA 186.6 510.1 Free cash flow (178.7) 178.7 Net debt 941.6 1,224.0 Full year proposed dividend per share (pence) – 5.16 To supplement IFRS reporting, we present our results on an underlying basis which shows the performance of the business before separately disclosed items, comprising amortisation of intangibles for acquired businesses and, for 2020, certain costs arising as a direct consequence of the pandemic. Treatment as a separately disclosed item provides users of the accounts with additional useful information to assess the year-on-year trading performance of the Group. Further details relating to separately disclosed items are provided on page 167 in note 5 to the Financial Statements. All definitions of alternative performance measures used throughout the Annual Report are included on page 243. 2 National Express Group PLC Annual Report 2020 What we do Where we operate We own and lease buses, coaches and trains which we use to deliver We hold the largest market share for long haul coach transport local, regional, national and international transportation services. in both Spain and the UK, and are the second largest school All vehicles are driven and maintained to our global standards. bus provider in North America. We are the largest bus operator in Morocco. In Spain, Morocco, North America and Germany, services are run typically under an exclusive concession. In the UK, our bus and coach services are unregulated. Strategic Report Strategic Revenue breakdown by business line Student transportation Urban bus Regional/long haul coach (North America school bus) (UK bus, North America transit, ALSA) (ALSA regional and long haul, UK coach) Corporate Governance Corporate £550m £754m £365m Statements Financial 28%1 38%1 19%1 2019: £804m 2019: £796m 2019 £752m Charter and other Rail (North America, ALSA and UK) (German Rail) Additional Information £148m £139m 8%1 7%1 2019 £302m 2019 £90m 1 Percentage of Group revenue National Express Group PLC Annual Report 2020 3 Year overview An unprecedented year Performing strongly Doing the right things Ready to emerge before the crisis through the crisis strongly from the crisis Pre-pandemic performance was An unprecedented 80% drop in We remain excited by the long-term particularly strong with revenue up 17% passenger demand following lockdown opportunity. The global recovery must be year-on-year in January and February. was mitigated by proactive customer powered by a more efficient economy that engagement to limit revenue loss to 50% is cleaner and greener. High quality mass ALSA was performing very strongly with and swift action to significantly reduce transit will be a necessity, and the financial revenue up 23% in the first two months service to save variable costs. strains caused by the pandemic will create of the year driven by underlying growth opportunities for operators that are able of over 6% boosted by the new contracts The safety and welfare of our customers to adapt and survive. in Rabat and Casablanca and acquisitions and colleagues remained our priority made in 2019. Our Spanish business was with enhanced cleaning regimes and Public transport has always played a performing strongly across all segments reconfigured vehicle layouts quickly key role in social mobility and in these but particularly in long haul where revenue established; personal protective equipment unprecedented times it is ever more was up 8%. (PPE) promptly distributed and employee important in enabling economic recovery welfare programmes enhanced. by providing safe access to work, North America was performing strongly education, retail and leisure. Where with revenue up 16% in the first two Across the Group services were restrictions have been removed, we months of the year, largely driven by repurposed to meet community needs have seen a rapid recovery in demand. continued growth in our transit and shuttle such as food parcel delivery, health businesses. The renewal and expansion worker shuttles; and medical transport. We are confident that our strong reputation of our two largest transit contracts in the for service and safety, close relationships fourth quarter of 2019 flowed through to Swift and decisive action was taken to with customers and improved Balance the start of the year, while the acquisition protect the financial position of the Group Sheet mean we will be well placed to of WeDriveU in April 2019 also boosted with liquidity boosted by a £230 million prosper post pandemic.