Strategic Report

Strategic Report
Investment case
A sound investment case

1. A best in class public transport operator* 3. Well balanced portfolio

Margin Best in Divisional split by revenue

Corporate Governance
% class %

Spain and Morocco 14.1 NX n Spain and Morocco

n North America
North America 9.6 NX
n UK Bus
UK Bus 12.1 15 n UK Coach
UK Coach 10.2 NX n Rail

Rail 6.4 NX

Group 10.3 NX Modal split by revenue

Financial Statements
*By margin
n Bus
n School Bus/Transit
2. A sound strategy in place
n Coach
n Rail
Delivering operational excellence
• Best in class Group margin of 10.3%
• Revenue growth of 2.3%
• £8.7 billion of long term contracted or concessionary revenues
• Sustainable long term earnings: Core non-rail profit
4. S
 table long term finance in place and commitment
growth to £185.1 million
to investment grade rating

Additional Information
Gearing ratios 2014 2013 Covenant

Net debt/EBITDA 2.25x 2.5x <3.5x

Interest cover 6.3x 6.1x >3.5x

Generating superior cash and returns
Ratings Grade Outlook
• Free cash flow of £190 million
• Operating cash conversion of 128% Moodys Baa3 Stable
• Net debt reduced by over £80 million in 2014
• Group ROCE increased by 70bps to 12.4% Fitch BBB- Stable
• Surplus cash to be invested in targeted bolt-on acquisitions
in North America from 2015 onwards
Strong debt maturity profile

416
390
Creating new business opportunities
235
• Over £4.2 billion of new contracts won during the year:
Drawn
• Middle East – Won first urban bus contract in Bahrain; 26 22 19 11
66
pursuing further opportunities in the region Available
• Transit – Retention and growth of largest US transit contract; 15 16 17 18 19 20 21
annualised Transit revenue now circa $80 million
• Rail – Retained Essex Thameside; preferred bidder for
Nuremberg S-Bahn in Germany 5. Dividend policy based on sustainable
non-rail earnings basis
2014 2013
p p
Read more p12
Basic EPS Non-rail 21.2 20.1

Rail 1.5 1.4

Group 22.7 21.5

Dividend 10.3 10.0

www.nationalexpressgroup.com 5