Spring-Summer 2020 Investor presentation Includes Full Year - PowerPoint PPT Presentation

Spring-Summer 2020 Investor presentation Includes Full Year financial results for the year ended 31 December 2019

Cautionary statement This Review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the Review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies to succeed. It should not be relied upon by any other party or for any other purpose. Forward looking statements are made in good faith, based on a number of assumptions concerning future events and information available to Directors at the time of their approval of this report. These forward looking statements should be treated with caution due to the inherent uncertainties underlying any such forward looking information. The user of these accounts should not rely unduly on these forward looking statements, which are not a guarantee of performance and which are subject to a number of uncertainties and other facts, many of which are outside of the Company’s control and could cause actual events to differ materially from those in these statements. No guarantee can be given of future results, levels of activity, performance or achievements. For a full list of definitions, please refer to the Glossary of Alternative Performance Measures on page 24 of the Full Year results statement. 2

Contents – Investment case, business model & strategic priorities – Our markets – Financial results full year 2019 – Business review full year 2019 – Strategic review full year 2019 – Appendix 3

Investment case, business model & strategic priorities

Investment case Diversity is our strength International diversified transport company with a strong cash flow supporting multiple growth opportunities & an attractive dividend yield – Leading international public transport operator with best in class margins – Internationally diversified portfolio with over 70% of earnings outside the UK – Stable & growing revenues – Disciplined capital allocation – target returns at least 15% – Strong sustainable cash flow generation driving growth both organically & via acquisitions • Sustainable compounding growth – Stable, long-term financing & commitment to investment grade rating – Strong dividend: medium-term dividend cover of at least 2.0x Group earnings – Strong ESG credentials 5

Business model Internationally diversified & balanced portfolio Where & what we operate Revenue breakdown by territory o USA £1,153m o Spain £746m o UK £600m o Germany £90m o Canada £77m o Morocco £65m o Switzerland £14m Sources of revenue o Contracts 50% o Passenger revenues 37% o Private hire 6% o Grants & subsidies 4% o Other revenues 3% 6

Strategic priorities Driving our business forward through our strategic priorities Delivering Deployment of Growing our operational technology business through excellence acquisitions & market diversification – We utilise technology to raise – We continue to look to grow – We aim to be the safest, customer & safety standards, our unique portfolio of most reliable, convenient & drive efficiencies in our international bus, coach & rail best value transport provider in business & facilitate growth businesses through selective the modes we operate bolt-on acquisitions & diversification into complementary markets 7

Our strategy is delivering Delivering strong & Industry-leading To reinvest in Converting to strong sustainable revenue margins converting growing the free cash flow growth to record profits business & return to shareholders – Generated £773m* of free – Built a $0.5bn Transit bus – 5 year revenue CAGR – 5 year EPS CAGR 12.8%* cash flow over last 5 years business in 6 years 10%* – Operating margin of 10.8% – Gearing at 2.4x** post – Acquisitions delivering – Robust organic growth adoption of IFRS 16 & after returns of 15% boosted by bolt-on investing £701m since start acquisitions – DPS up 58.7%* over last 5 of 2015 years *To 31 December 2019 ** Application of IFRS 16 increases gearing by 0.2x 8

Capital allocation Sustainable compounding growth £510m EBITDA Less £211m CAPEX Less £120m tax, interest & working cap £179m FCF Invest in the business Manage gearing Return to shareholders (2.5x → 2.0x) at 15% ROIC at 2.0x cover 9

Strong environmental credentials – Our West Midlands bus fleet is the largest certified low-carbon fleet Taking cars off the road, easing congestion, reducing outside London emissions – Public transport key to tackling climate change & provision of clean – Early adopter of the UN’s Sectoral Decarbonisation Approach climate transport science based targets • Each coach takes up to a mile of traffic off the road • Each bus takes up to 75 cars off the road – reducing congestion & Sustainalytics Rating speeding up journey times – National Express rated ‘low risk’ for ESG overall – and in every • Euro VI bus less polluting than Euro 6 car on an absolute basis subcategory – Investing in electric vehicles across each of our businesses • Rated in the top percentile of all transport companies (320) in the • 29 new electric buses in UK in 2020 Sustainalytics global universe • Rated 4 th percentile of over 12,000 companies in the Sustainalytics • Commitment not to buy another diesel bus in the UK global universe – UK fleet 80% Euro VI compliant by year end; 100% by April 2021 10

Delivering on our strategy Strong track record of profitable growth Revenue £m Free cash flow £m ROCE % 2744 12.4 12.4 198.6 2451 2321 178.7 2094 11.9 146.4 138.6 11.9 1745 111 11.7 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Normalised operating profit £m Earnings per share p Dividend per share p 34.5 295.3 32.9 16.35 257.7 29.1 14.86 241.5 13.51 26.3 217.5 12.28 23.4 11.33 190.6 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 11

Our markets

North America Record year with further diversification into fast growing markets ‐ Our North American business has three principal areas of activity: student transportation (school bus), transit services and shuttle Division Overview services (through newly acquired WeDriveU) $24bn School Bus – c.1/3 outsourced, $25bn Transit c.1/3 outsourced Overall Market Size ‐ ‐ Fragmented school bus market Features ‐ Low barriers to entry but hard to get scale Bigger players – access to capital, geographical reach, scale advantages & investment in technology ‐ Competition Top 6 players – First Student, National Express, STA, Illinois Central, Krapf, Cook Illinois ‐ ‐ Price increases on renewal. Average price increase of 3.9% across portfolio, 5.9% of our contracts up for bid & renewal. Contract retention 92% on contracts up for renewal Growth Drivers ‐ Acquisitions: 3 done in 2019. Building on & providing entry into new/fast growing market segments ‐ Significant growth opportunities in charter services & greater utilisation of fleet Driver wage pressure – 3.4% in 2019/20 Market Considerations ‐ Mitigants ‐ Cost efficiencies Revenue: +11.1% in constant currency – growth augmented with Generating superior cash & returns select acquisitions, notably WeDriveU 2019 2018 Profit: +21.4% in constant currency – revenue growth & favourable Revenue $1,570.6m $1,413.6m price increases versus driver wage increases, offsetting higher fuel Op profit $157.0m $129.3m costs & adverse weather Margin 10.0% 9.1% 13

ALSA Record revenue, profit & passengers ALSA is Spain’s leading private operator of coach and bus services. It is also the leading bus operator in Morocco and runs a number of ‐ Division Overview bus services in Switzerland € 4bn in Spain Overall Market Size ‐ ‐ Regulated & highly segmented market with 3 levels of Government regulation; national, regional & urban Features ‐ Each concession is exclusive to the operator ‐ Intercity competition from state-backed rail & low cost airlines Competition ‐ Concessions awarded through competitive public tender, up to 10 years ‐ Increasingly sophisticated RMS (Revenue Management System) driving revenue, volume & yield. Record passengers, +12.8% to 368m, growth across each segment & ancillary revenues up 14% ‐ Growth Drivers Concession renewals, urban contract wins in Spain & Morocco, selective acquisitions ‐ Opportunities in intercity & further cities in Morocco Recent entry into Switzerland – building scale in discretionary travel & ski transfer markets ‐ Market Considerations ‐ Intercity concession renewal Mitigants ‐ Continued diversification of revenue streams Revenue: +11.7% at constant currency - organic growth of 10.8%. Generating superior cash & returns Benefitting from RMS, acquisitions & 2 new cities in Morocco 2019 2018 € 940.6m € 842.3m Profit: +4.9% at constant currency – strong underlying growth, but Revenue higher hedged fuel prices & lower profitability during mobilisation in € 124.9m € 119.1m Op profit Morocco Margin 13.3% 14.1% 14