National Express Group PLC is the keeping company of the National Express Group of companies. Its subordinate companies provide mass rider conveyance services in the United Kingdom and overseas. The Company ‘s sections comprise: UK Bus ; UK Coach ; UK Rail ; North American Bus ; European Coach and Bus, and Central maps. Its subordinates include Tayside Public Transport Co Limited, Durham School Services LP, Stock Transportation Limited, Dabliu Consulting SLU, Tury Express SA, and General Tecnica Industrial SLU. In June 2009, the Company announced the completion of the sale of Travel London, its London coach concern, to NedRailways Limited, a subordinate of NS Dutch Railways.
For the six months ended 30 June 2010, National Express Group PLC ‘s grosss decreased 26 % to ?1.06B. Net income from go oning operations totaled ?19.2M vs. a loss of ?42.2M. Revenues reflect a lessening in income from UK Bus and lower income from UK Rail divisions. Net income reflects a lessening in operating costs, lower exceeding points, the presence of runing net incomes vs. a loss and the absence of loss on disposal and non current assets.
The most common usage of the term ‘gearing ‘ is to depict the degree of a company ‘s net debt compared with its equity capital, and normally it is expressed as a per centum. So a company with geartrain of 60 per cent has degrees of debt that are 60 per cent of its equity capital. The pitching ratio shows how encumbered a company is with debt. Depending on the industry, a pitching ratio of 15 % would be considered prudent while anything over 100 % would be considered hazardous or ‘highly geared ‘ .
‘Gearing ‘ is besides used in a related sense to mention to adoptions by an investing trust that boosts the return on capital and income via extra investing. When the trust is executing good stockholders enjoy an enhanced or ‘geared net income ‘ . However if the trust performs ill so the loss is likewise overdone. Gearing can besides mention to the ratio between a company ‘s portion monetary value and its warrant monetary value.
A extremely geared company is one where there is a high proportion of debt to equity, and can be considered a hazardous investing as there is a higher likeliness of the company being unable to pay its big debts.
The Modigliani-Miller theorem provinces that, in the absence of revenue enhancements, bankruptcy costs, andA asymmetric information, and in an efficient market, a company ‘s value is unaffected by how it is financed, irrespective of whether the company ‘s capital consists of equities or debt, or a combination of these, or what the dividend policy is. The theorem is besides known as theA capital structureA irrelevancy rule.
A figure of rules underlie the theorem, which holds under the premise of both revenue enhancement and no revenue enhancement. The two most of import rules are that, foremost, if there are no revenue enhancements, increasing purchase brings no benefits in footings of value creative activity, and 2nd, that where there are revenue enhancements, such benefits, by manner of an involvement revenue enhancement shield, accrue when purchase is introduced and/or increased.
Motions in the Group ‘s net debt are explained above. Gearing at 31 December 2006 was 219 % ( 2005: 234 % ) . During the first half of the twelvemonth, company refinanced two bing bank debt installations into one new ?800m five twelvemonth go arounding recognition installation maturating in June 2011.
As at 31 December 2006, the headway under the installation was ?247.8m. In the twelvemonth, the Group repurchased 1,425,000 portions for consideration of ?11.6m. All the portions repurchased have been retained as exchequer portions within equity for future issue under the Group ‘s portion schemes or for cancellation or resale.
The Group ‘s exchequer aim is to pull off the hazard for possible loss of stockholder value from certain fiscal hazards.
Net involvement payable increased to ?24.9m ( 2005: ?11.4m ) , chiefly reflecting a higher degree of net debt as a consequence of the Alsa acquisition in December 2005. This was offset by the weakening of the US dollar which decreased the cost of serving our foreign currency denominated funding.
The Group ‘s multi-national operations and important debt funding expose it to a assortment of fiscal hazards, the most stuff of which are the effects of alterations in foreign currency exchange rates, involvement rates and alterations in fuel monetary values. The Group has in topographic point a hazard direction programme that seeks to restrict the inauspicious effects of these hazards on the fiscal public presentation of the Group by utilizing fiscal instruments including adoptions, frontward exchange contracts, fuel monetary value and involvement rate barters.
During 2007, the Group issued 792,659 portions to run into duties under its employee portion strategies, for consideration of ?5.5m. The Group ‘s chief geartrain ratio is net debt to EBITDA. At 31 December 2007, based on the reported EBITDA of ?282.9 ( 2006: ?264.0m ) and net debt of ?910.8m ( 2006: 438.4m ) the ratio was 3.2 ( 2006: 1.7 ) with the addition driven by the acquisition of Continental Auto.
The Group ‘s net debt includes hard currency balances numbering ?55.2m ( 2006: ?33.5m ) which can non be withdrawn from our Train Operating Companies ( TOCs ) . This is because the franchise understandings with the Department for Transport ( DfT ) restrict the backdown of hard currency to guarantee TOCs is able to run into its working capital demands. Cash can merely be withdrawn by loan or dividend to the extent that certain fiscal ratios are complied with.
2008 proverb unprecedented convulsion and break in planetary fiscal markets. Handiness of debt support to concerns for new investing and refinancing became badly curtailed and most companies are now looking to their ain ‘self help ‘ chances to present hard currency. Given this disputing economic and funding environment for 2009, National Express have placed increased accent on guaranting a stable fiscal platform for the Group. Group have an above mean debt degree, Group besides evolved a fiscal program to present: Strong hard currency direction, to cut down the Group ‘s debt ;
In add-on, the Group has realigned its currency debt construction to reflect falling
involvement rates and currency failing, traveling debt out of a US dollar/Euro pulling
construction into a Sterling/Euro construction that matches the Group ‘s installation currencies
and reduces volatility. As a consequence of these actions, the Group maintained ?144 million
of fresh committed installations at the terminal of 2008.
In 2009 Group successfully deleveraged – net debt reduced by ?521.9 million to ?657.9 million ( 2008: ?1,179.8m ) with our debt geartrain ratio reduced to 2.5 times by the terminal of 2009 – from 3.5 times a twelvemonth earlier. This was reflected in a successful ?350 million, seven twelvemonth Sterling bond issue by the Group in January 2010, which was to a great extent oversubscribed. This bond issue has allowed us to pay down important debt due in 2010 and 2011.
Net debt reduced by ?521.9 million, including a ?24.3 million foreign exchange addition, during the twelvemonth to ?657.9 million ( 2008: ?1,179.8m ) . Of this, ?357.9 million came from stockholders and ?164.0 million from internal hard currency coevals. This underlines the success of the debt decrease programme in 2009. As a consequence, the Group ‘s cardinal debt ratios returned to more favourable degrees.
Every concern faces hazards and uncertainnesss across a scope of strategic, commercial, operational and fiscal countries. The Group ‘s direction recognizes those hazards, and puts in topographic point steps to extenuate them.
National express group concentrating on hard currency coevals to cut down debt – in 2009 they improved operating hard currency coevals from ?152.3 million in 2008 to ?281.3 million.
A dividend is a payment made to a shareholder by a company from any earned net incomes ( i.e. non from any other excess ) . Companies by and large use net income for two things-to wages shareholders for puting in the company or to reinvest in the concern ( known asA maintained net incomes ) .
Most companies by and large reinvest a part of the net income and pay out the remainder in dividends. From the company ‘s position, the payment of dividends is the division of an plus among shareholders.
Dividends are paid out on after-tax income, although the dividends received by shareholders are normally treated asA nonexempt incomeA for revenue enhancement intents, depending on their state of abode.
When puting up your dividend policy, cardinal determinations will be how often to pay out, what per centum of net income to administer among shareholders, and whether you will offer them other options, such as stocks in stead of hard currency. Once the policy is in topographic point, it needs to be communicated clearly to all shareholders so that they know how frequently and in what form dividends will be distributed.
Having a clear and crystalline policy is indispensable for pulling shareholders. They are seting trust into a company by puting in it, and the company returns that trust by being unfastened about what investors can anticipate to have in return.
It is besides of import that any alterations to the dividend policy, whether impermanent or lasting, are communicated clearly and in a timely manner to shareholders.
National Express Dividend Decision
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From the above, it has been seen that National Express has maintained more or less stable dividends over period of 3 old ages from 2007 to 2005. It does non hold the rigorous dividend policy but it sum of dividend moves around 37p-32p. From the above tabular array it can be assumed that National express is paying minimal sum of dividend each twelvemonth. Due to this National express better fulfilling its stockholders and heightening the credibleness of the company in the market.
In a stable dividend policy the company will non hold a job in raising future finance as the investors will analyze the past dividend record of the company. The portion monetary values remain stable or high in the stock market. National Express pays dividends to its stockholders on an equalized footing. National Express performed really good in the twelvemonth 2007 and a concluding dividend of 26.40p per portion will be paid in May 2008, conveying the entire dividend for the twelvemonth to 37.96p. This is a 9.2 % addition in entire dividends declared compared to 2006 reflecting the 9.7 % addition in normalized diluted net incomes per portion. It is proposed to denote a three twelvemonth committedness on dividend growing of 10 % per annum. It had produced strong and good consequences in footings of hard currency flows and produced considerable returns to stockholders in footings of portions, dividends and purchase dorsums.
For the twelvemonth ended 31 December 2009 the loss on ordinary activities before revenue enhancement from go oning operations was ?83.5 million ( 2008: net income of ?109.9m ) and a loss attributable to equity stockholders of ?53.5 million ( 2008: net income of ?118.8m ) was transferred to militias.
No concluding dividend will be paid for the twelvemonth ended 31 December 2009 ( 2008: 10 pence ) . No interim dividend was paid during the twelvemonth ( 2008: 12.72 pence ) .
Much of this came from cut downing investing and pull offing group working capital better. But nest eggs besides, needfully, included the passing of the dividend.
However, by year-end, group had delivered over ?200 million of incremental hard currency coevals from this self-help programme, more than double the mark group had set 12 months earlier of ?100 million. Given the longer term hard currency productive nature and net incomes potency of the Group ‘s operations,
By the terminal of 2009, net debt had been reduced by ?521.9 million to ?657.9 million – with ?357.9 million raised from stockholders and ?164.0 million from organic hard currency coevals and ‘self-help ‘ steps.
With group debt pitching ratio reduced to 2.5 times by the terminal of 2009 – from 3.5 times a twelvemonth before – group capital construction is improved, group debt degree reduced and group debt compact headway more flexible. This was reflected in a successful ?350 million, seven twelvemonth
Sterling bond issue by the Group in January 2010, which was to a great extent oversubscribed. This bond issue has allowed us to pay down important debt due in 2010 and 2011.
Dividend Payout Ratio
The one-year dividend is the entire sum ( pence ) at dividends you could anticipate to have if you held the stock for a twelvemonth ( presuming no alteration in the company ‘s dividend policy ) .
Payout Ratio ( % ) ( 0.00 ) ( % )
Dividend Per Share x100 0.00 ten 100
Primary EPS ( 0.20 )
The dividend output is the indicated one-year dividend rate expressed as a per centum of the monetary value of the stock, and could be compared to the voucher output on a bond. The Payout Ratio tells you what per centum of the company ‘s net incomes have been given to share-holders as hard currency dividends. A low payout ratio indicates that company has chosen to reinvest most of the net incomes back into the concern.
Dividend per Share: Common Stock Cash Dividends divided by the portions outstanding.
Payout Ratio: This ratio is the per centum of the Primary/Basic Earnings per Share Excluding Extraordinary Items paid to common shareholders in the signifier of hard currency dividends.
The stockholder pay-out has been suspended since 2008, after NatEx was last twelvemonth forced to return the East Coast Main Line franchise to the Government and struggled to finish a ?360 million rights issue.
But boss Dean Finch sounded far more cheerful today as the coach, manager and train operator said its pre-tax net income rose 36 % to ?76 million.
“ Net debt is down 40 % to merely over ?600 million, hard currency public presentation is good, we to the full expect to restart the dividend by the year-end. Our lone note of cautiousness is we want to see how the manager concern does in the UK andA SpainA over the summer months, ” he said
2008 was besides a twelvemonth of important weakening in the planetary economic system. The 4th one-fourth saw a pronounced lag in growing, peculiarly in UK Rail and in Spain. With the unprecedented break in bank markets, any concern with higher than mean debt, including National Express, has suffered a important inauspicious rerating of its equity ; in short, a decreased portion monetary value.
ANALYSYS OF WORKING CAPITAL USING RATIO ANALYSIS
Working capital is the capital available for carry oning the daily operations of an organisation ; usually the surplus of current assets over current liabilities.
Working capital direction is the direction of all facets of both current assets and current liabilities, to minimise the hazard of insolvency while maximising the return on assets.
The chief aim of working capital direction is to acquire the balance of current assets and current liabilities right.
Guaranting current assets are sufficiently liquid to minimise the hazard of insolvency
Maximizing the return on capital employed ( ROCE ) hence minimising investing in working capital.
Current assets are major balance sheet point and particularly important to smaller houses. Mismanagement of working capital is hence a common cause of concern failure, e.g. :
Inability to run into measures as they fall due
Demand on hard currency during period of growing being excessively great ( overtrading )
Two cardinal steps, the current ratio and the speedy ratio, are used to measure short-run liquidness. By and large a higher ratio indicates better liquidness.
Meaasures how much of the entire current assets are financed by current liabilities.
Current ratio= Currents Assetss
Measure how good current liabilities are covered by liquid assets
Is peculiarly utile where stock list keeping period are long.
Quick Ratio= Current assets -Inventory
The liquidness ratio are a usher to the hazard of hard currency flow jobs and insolvency. If a company all of a sudden finds that it is unable to regenerate its short-run liabilities, there will be a danger of insolvency unless company is able to turn plenty of its current assets into hard currency rapidly.
In general, high current and speedy ratios are see ‘good ‘ in that they mean that an organisation has the resources to intend its committednesss as they fall due. However it may bespeak that working capital is non being used expeditiously.
The Group ‘s liquidness hazard is managed centrally by the Group exchequer section with runing units calculating their hard currency and currency demands. The Group actively maintains a mixture of long term and short term committed installations that are designed to guarantee the Group has sufficient available financess to run into current and forecast fiscal demands as cost efficaciously as possible.
In pull offing the liquidness hazard, the Group has entree to a scope of support at competitory rates through capital markets and Bankss.
The exchequer section located at the caput office coordinates relationships with Bankss, adoption demands, foreign exchange demands and hard currency direction.
At 31 December 2009, the Group had committed adoption installations of ?1,066.7m ( 2008: ?1,363.8m ) of which ?318.6m ( 2008: ?143.8m ) were undrawn. During the twelvemonth, ?361.0m of debt was repaid following a rights issue, of which ?225.0m was used to refund drawings on portion of the Euro bank loan installation. Subsequent to the refund, the Euro bank loan installation was reduced to a‚¬270.0m ( ?239.3m ) .
In 2008 the Group actively maintains a mixture of long term and short term committed installations that are designed to guarantee the Group has sufficient available financess to run into current and forecast fiscal demands as cost efficaciously as possible. As at 31 December 2008 the Group had committed adoption installations of ?1,363.8m ( 2007: ?1,167.5m ) of which ?143.8m ( 2007: ?199.4m ) were undrawn. The Group ‘s primary bank installations expire in September 2009 with an option to widen to September 2010 at the Group ‘s discretion and June 2011 and the rental installations at assorted times in line with their footings.
At 31 December 2007, the Group had two bank debt installations: an ?800m go arounding recognition installation maturating in June 2011 and a a‚¬500m term loan installation run outing in April 2008. At 31 December 2007, the headway under the installations was ?199.4m ( 2006: ?247.8m ) .
The Group has complied with all of its banking compacts in the twelvemonth.
Since twelvemonth terminal we have replaced the a‚¬500m term loan installation with a a‚¬540m term loan installation run outing in February 2009 with a one twelvemonth extension to February 2010 at the Group ‘s option.
The Group ‘s net debt includes hard currency balances numbering ?55.2m ( 2006: ?33.5m ) which can non be withdrawn from our TOCs. This is because the franchise understandings with the DfT restrict the backdown of hard currency to guarantee a TOC is able to run into its working capital demands. Cash can merely be withdrawn by loan or dividend to the extent that certain fiscal ratios are complied with
In 2006group actively maintains a mixture of long term and short-run committed installations that are designed to guarantee the Group has sufficient available financess to run into current and forecast fiscal demands as cost efficaciously as possible. As at 31 December 2006 the Group had committed adoption installations of ?903.1m of which ?247.8m were undrawn. The Group ‘s primary loan installations expire in June 2011 and the rental installations at assorted times in line with their footings.