Mobico : Annual Report 2023 Slide

Leading sustainable

travel

Mobico Group

Annual Report and Accounts for the year ended 2023

Strategic report

2023 summary	01
We provide safe, efficient, clean and shared	02
mobility solutions
Sustainability is at the heart of Mobico Group	04
Chair's statement	06
Our markets	08
Our Evolve strategy	10
Our business model	12
Measuring progress	15
CEO's review	18
Performance reviews	23
- ALSA	24
- North America	27
- UK and Germany	30
CFO's review	34
Risk management	40
Principal risks and uncertainties	42
Viability statement	48
Engaging our stakeholders	50
Sustainability at Mobico Group	52
We respect the planet	54
We connect places and transform communities	57
We move people safely and responsibly	59
TCFD Disclosure	65

Governance report

Chair's introduction to Corporate Governance	80
Board of directors	82
Board activity in 2023	83
Division of responsibilities	85
Section 172(1) statement	88
Purpose, values and culture	90
Stakeholder relations	93
Nominations Committee report	98
Audit Committee report	102
Sustainability Committee report	109
Remuneration at a glance	111
- Remuneration Committee report	112
- Annual Report on Remuneration	117
- Directors' Remuneration policy	127
Directors' report	137
Directors' responsibilities	141

Financial report

Independent Auditor's Report	143
Group Income Statement	153
Group Statement of Comprehensive Income	154
Group Balance Sheet	155
Group Statement of Changes in Equity	156
Group Statement of Cash Flows	158
Notes to the Consolidated Accounts	159
Company Balance Sheet	240
Company Statement of changes in Equity	241
Notes to the Company Accounts	242

Additional information

Five Year Summary	246
Environmental performance	247
Shareholder information	249
Definitions and supporting information	250
Alternative performance measures	251
Key contacts and advisers	254

Vision

Our vision is to be the world's premier shared mobility operator

Purpose

Our purpose is to lead the modal shift from cars to mass transit

Values

•	Safety	•	People
•	Excellence	•	Community
•	Customers	•	Environment

Mobico GroupAnnual Report and Accounts 2023

Mobico is a leading international transport provider,diversified internationally with operations in North America, continental Europe, the UK, Middle East and North Africa.

2023 summary

Revenue (£m)	Free Cash Flow (£m)
+12%	+2%
£3,150.9m	£163.7m
(2022: £2,807.5m)	(2022: £160.5m)
Adjusted	Statutory
Operating Profit (£m)	Operating Loss
-15%	+88%
£(21.4)m
£168.6m
(2022: £197.3m)	(2022 restated: £(173.5)m)
Adjusted EPS (p)	Statutory EPS (p)
4.5p	(30.2)p
(2022: 15.0p)	(2022 restated: (41.4)p)
Covenant Gearing	Dividend (p)
3.0x	1.7p
(2022: 2.8x)	(2022: 5.0p)

• Revenue growth of 12.2%, with continued delivery on pricing and passenger volume increases across the Group, including record year at ALSA and driver & route recovery in North America School Bus
• Adjusted Operating Profit decreased to £168.6m (FY 22: £197.3m) as benefits of volume recovery and in-year benefit from pricing and Accelerate 1.0 cost reduction programme were offset by cost inflation, reduction in Covid subsidies and lower profitability in Germany
• Statutory Operating Loss of £21.4m (FY 22 restated: £173.5m loss, itself following significant ALSA impairment), impacted by £30m restructuring costs and £99m charge to the German Rail onerous contract provision
• German profitability impacted as a result of industry wide labour scarcity, productivity issues, market volatility in energy prices and persistent high inflation, with approximately £10m in year impact as a result of changes to forward looking assumptions
• Further pricing and restructuring benefits to come with 'Accelerate 1.0' delivering in excess of £30m annualised, and 'Accelerate 2.0' well underway targeting at least £20m annualised
• 43 new contracts won across the Group, worth over £1bn in total contract value and circa £126m in annualised revenue, at ROCE of 23%, in line with Evolve strategy. Group mobilised in new key target cities, including Porto, Seville and Charleston as well as multi-modal hub expansions in Madrid, Chicago, Boston and Geneva
• New management teams in US School Bus and the UK & Germany
• Significant progress on driver recruitment and route reinstatement in US School Bus with driver shortage now only 2%; albeit with a consequential impact on higher training and recruitment costs
• Average rate increases in School Bus of 13% achieved on the 40% of contracts renewed in the year, recovering increased driver costs, albeit with a timing lag
• Covenant gearing ratio of 3.0x, increased from 2.8x last year end
• Debt maturity and liquidity improved with new £600m Rolling Credit Facility (RCF) facility to 2028 and maturing £400m bond replaced with a €500m Eurobond issue maturing in 2031
• Fuel cost was 100% hedged for 2024 and around 50% for 2025
• Fleet decarbonisation accelerating and on track to reach our target of 1,500 ZEVs across the Group by 2024

To supplement IFRS reporting, we also present our results on an adjusted basis to show the performance of the business before adjusting items. These are detailed on pages 177 to 179 and principally comprise for the 12 months to 31 December 2023; intangible amortisation for acquired businesses, re-measurement of historic onerous contract provisions and impairments, re-measurement of the WeDriveU Put Liability, repayment of UK CJRS grant income ('furlough') and Group wide restructuring and other costs. In addition to performance measures directly observable in the Group financial statements (IFRS measures), alternative financial measures are presented that are used internally by management as key measures to assess performance. Further explanation in relation to these measures can be found on pages 251 and 252.

Mobico GroupAnnual Report and Accounts 2023

01

We provide safe, efficient, clean and reliableshared mobility solutions

to cities, businesses, education, healthcare and consumers around the world.

What we do

We design, mobilise, and operate high quality mass transportation services in and between cities across the globe. We have global standards that apply to how we operate, maintain and drive vehicles. The vehicles can be owned or leased. In Spain, Morocco, Portugal, Bahrain, North America and Germany, services are run typically under an exclusive contract. In the UK, our bus and coach services are not contracted.

Where we operate

We operate in more than 50 key cities in

12 countries across the world, providing services to cities, businesses, healthcare and education providers, and direct

to customers.

We are internationally diversified and multi-modal.

We are the market leader in providing long haul coach transport in both Spain and the UK, and are one of the largest school bus providers in North America.

We deliver large-scale urban bus operations in the UK, Spain, Morocco, Portugal, Switzerland, Bahrain and the USA.

We provide accessible paratransit services in the USA, Spain and in the UK.

We are one of the leading corporate and university shuttle solutions providers in the USA.

We deliver large-scale rail operations in Germany.

The Group earns revenue across a broad range of transportation services.

5 things about Mobico Group and our operations:

Rail	Charter, private hire
£259.8m	and leisure
German Rail	£296.2m
	North America,
	ALSA and UK

More than 1 billion

01 passenger journeys were made on our services in 2023

We operate in more

02 than 50 key cities in

Read more on customer safetyon page 84

Transit and Shuttle

£336.4m

North America

Urban bus

£587.1m

UK Bus/ALSA

Per mile, bus travel is

10x

safer than driving a car

Student transport

£713.1m

North America School Bus

Regional/long haul coach

£958.3m

ALSA regional and long haul, UK Coach

The cost of using buses is around

20%

of that of car ownership

12 countries across the world

We operate 27,700

03 vehicles - with a strategy to transition to a fully zero emission fleet

67% of the Group's

04 revenue is generated through multi-year contracts

We have a dedicated

05 workforce of 47,700 across the Group

Read more on divisional reviewson pages 23 to 33

Read more on sustainabilityon pages 52 to 64

Read more on our Evolve strategyon pages 10 and 11

Read more on our business modelon pages 12 and 13

02	Mobico GroupAnnual Report and Accounts 2023

Strategic report Governance report Financial report Additional information

ALSA

• ALSA
• Sanir
• AlpyTransfers
• ALSA Morocco
• ALSA Portugal
• ALSA Switzerland
• SAT (SAPTCO ALSA For Transportation)

ALSA operates long distance, regional and urban bus and coach services across Spain, Morocco, Portugal, Switzerland and France.

Apart from its scheduled bus and coach services, ALSA offers mobility solutions to meet business, leisure and healthcare needs.

ALSA has significant operations in other markets, including urban bus operations in Bahrain. In Saudi Arabia, we are partners in operating intercity coach services.

37.0%

of business revenue

North America

• National Express LLC
• Durham School Services
• Petermann
• WeDriveU
• National Express Transit
• Stock Transportation

In North America, we are one of the largest school bus operators providing student transportation services in 33 US states and two Canadian provinces.

Our Transit & Shuttle division provides services for clients including paratransit and fixed route bus services, and corporate and employee shuttle solutions.

35.4%

of business revenue

UK and Germany

• National Express
• National Express West Midlands
• National Express Transport Solutions
• National Express Rail

Our National Express business in the UK and Ireland includes scheduled intercity coach services, urban bus operations in the West Midlands, corporate and private hire solutions and our services connecting Dublin Airport in Ireland.

With a total of seven lines, in Germany, National Express connects the major cities of North Rhine-Westphalia quickly, conveniently and reliably. We operate 5 Rhein-Ruhr Express routes as well

as the RE7 and RB48 of the Rhine Munster Express.

27.6%

of business revenue

Mobico GroupAnnual Report and Accounts 2023

03

Sustainability is at the heartof Mobico Group

We are playing a significant role in accelerating modal shift, decarbonising travel, and building greener, more liveable cities.

Read more on	Read more on
customer safetyon page 84	TCFDfrom page 65

ta

l

n

l

e

e

m

a

n

d

o

e

r

r

i

s

h

v

i

n

E

he

m

p

od

s

dt

al

a

h

e

if

L

t

We respect

the

planet

We move

We connect

people

places

.

t

.

r

.

c

t

o

e

f

p

S

r

s

o

m

n

ic

a

r

a

rs

to m

s

a

f

as

o

e

s

h

t

c

f

o

r

e

y

Emplo

Our sustainability strategy supports three of our six Evolve strategy outcomes.

We respect the planet

The single most important step the Group can take to deliver decarbonisation and clean air is to lead the modal shift from cars to public transport. Our increasing experience of operating a growing fleet of Zero Emission Vehicles (ZEVs) demonstrates that there are early indications people are more likely to take a trip on a ZEV versus a diesel vehicle, which in turn will enable us to accelerate the benefits of modal shift for both our business and the environment.

Our expertise in managing the transition to ZEVs for public transport will play a significant role in accelerating modal shift, decarbonising travel, and building greener, more liveable cities.

2.5%

Reduction in Scope 1 and 2 intensity emissions Group wide on prior year

915

ZEVs in service or on order (2022: 491)

1st

place ranking by Corporate Knights Sustainability Global 100 in the Transit and Ground Transportation Sector in the UK

We connect places and transform communities

Mobico Group is proud of the role it plays in local communities and encourages colleagues to participate in a wide range of activities that have a positive impact on the diverse communities that we serve. Each of the divisions undertakes a wide range of community programmes and initiatives supporting young people.

At the Group level, Mobico has been a partner to Transaid for over a decade. Transaid's mission, to transform lives through safe, available transport, sits at the heart

of our purpose, to drive modal shift and key outcomes of the Evolve strategy. In particular, Transaid focus on road safety and aims to build employability and professional skills in local communities.

€1 million

Contributed to the Moroccan Earthquake Special Fund

1 billion +

Customer journeys provided

04	Mobico GroupAnnual Report and Accounts 2023

Strategic report Governance report Financial report Additional information

We move people safely and responsibly

As well as the role public transport plays to support decarbonisation, the industry also has a key role to play in driving social mobility. This has never been more important than in the current economic environment where public transport provides affordable access to work opportunities.

Committed to paying the living wage and employee engagement

During 2023, as part of our 'Your Voice Matters' campaign, we carried out our second global engagement survey across our 47,700 colleagues and achieved a 73% response rate.

The survey provided us with a benchmark against which we will drive future action. Key results included: 69% of colleagues agree we addess safety issues quickly and efectively; 77% of colleagues agreed that the organisation promoted DE&I and 70% of employees feel proud to work at Mobico.

Committed to our people

Delivering on our Vision and for our customers is only possible if Mobico is a good place to work.

Our commitment to our people includes our new People strategy, Be Part of the Future Today, has three main aims:

• Embraces diversity, equality and inclusion
• Helps us win the war for talent
• Enables our people to grow and develop in a high-performance culture.

Committed to transparency

We place strong value on Governance and aim to be open and transparent for all of our stakeholders. We are committed to being an employer of choice, with a genuine positive, safe and inclusive culture. Our employee value proposition reflects our commitment to support our colleagues to focus on their health and wellbeing, manage their careers and drive their personal development. We publish our gender pay gap reporting annually (https:// www.mobicogroup.com/about-us/our-policies/gender-pay-gap-reporting/) and recognise the importance of D&I across the Group.

Mobico GroupAnnual Report and Accounts 2023

05

Chair'sstatement

A challenging year,

but building for the future.

Helen Weir, Chair

Read more about our leadershipon pages 82 to 87

Financial Performance and Dividend

2023 was a challenging year for the Group and the Board recognises that the overall financial performance was disappointing. Notwithstanding revenue growth across the Group, which more than off-set the loss of Government subsidies, and strong profit momentum in ALSA, the pace of profit recovery in other parts of the Group was not sufficient to offset strong inflationary headwinds. It is now clear that these will take time to recover through pricing and operational improvements which means that the return to Group profit growth is taking longer to deliver than we had previously anticipated.

The challenging environment also highlighted, more than ever, the importance of a focus on tight management of costs, improving our leverage and increasing our returns. 2023 saw the successful delivery in excess of £30m cost savings across the Group as part of Accelerate 1.0 and we have already launched the next phase of our cost efficiency programme - Accelerate 2.0 - targeted at achieving a further £20m in annualised savings. In addition, we have commenced a process for the proposed sale of our asset intensive North American School Bus business.

On 12 October 2023, the Company announced that it would suspend the 2023 final dividend. The Board will continue to monitor business performance and prospects and the associated pace of reduction in covenant gearing. The Board is keenly aware of the importance of dividends to shareholders, but considers that reducing leverage is the primary priority. We will reinstate the dividend only when we consider that sufficient progress is being made on reducing the debt levels of the Group.

The delay to our audited results allowed management to conclude its review, and our auditors, Deloitte, the requisite amount of time to complete their audit work on our German business. This is in the context of the deterioration of profitability in 2023 primarily due to higher energy and labour costs, and driver shortages, and changes to certain indices used to calculate the associated cost recovery (with those changes being both in the behaviour of the indices, and a restatement of historical index values by the German Federal Statistical Office). The work to evaluate the impact on future contract performance is now complete, with the most significant result being the increase in the onerous contract provision for the RRX 2/3 contract. Work is already underway to improve the profitability of our German business going forward.

While the Board remains confident that the Evolve strategy will deliver profitable and sustainable growth in the years ahead, we recognise the need to take further immediate steps to improve profitability and reduce leverage.

Safety

Our relentless focus on safety continued in 2023. Although our FWI Index performance deteriorated year on year, it remains in line with our target and below historical levels. This is a significant achievement, particularly given the number of new driver hires in the year, and reflects the Group's ongoing investment in safety including the adoption of new technical solutions. We have also seen highly successful mobilisations in Lisbon in Portugal and Saudi Arabia where the business has invested significant time and resources to ensure that safety standards are maintained.

Environmental Leadership

The Group continues to move at pace to evaluate and mobilise ZEVs and our transition to net zero continues to gather momentum. We remain on track to have 1,500 ZEVs by 2024 and 14,500 by 2030. In addition, UK Bus remains on track to have 50% of its bus fleet comprised of ZEVs by 2025 and 100% by 2030.

In terms of environmental reporting, we have received confirmation that in January 2024, our new environmental targets were formally verified by the Science Based Initiative Taskforce in line with best practice reporting and we will move to reporting against our new targets in next year's annual report. We continue to improve our environmental data reporting processes and I am pleased that we have, once again, achieved limited external assurance to ISO1 4064-3 Standard from Carbon Responsible Limited for our Scope 1, 2 and 3 emissions.

06	Mobico GroupAnnual Report and Accounts 2023

Strategic report Governance report Financial report Additional information

Employer of Choice

As a growing international business, we know how critical our people are to the delivery of our performance and the achievement of our Evolve ambitions. How we treat our people is a cornerstone of our business. In 2023, we continued to work on our journey to creating a high trust, listening culture, as reflected in our people strategy: Be Part of the Future Today.

We have refreshed and strengthened our executive leadership, with new divisional CEOs being appointed in North America School Bus and the UK and Germany. These leadership changes are key to addressing

the specific challenges within these divisions, sharpening our commercial focus and ensuring we have a strengthened team to lead the future of sustainable travel.

We have undertaken our second global employee engagement survey. Once again we achieved a high level of participation at 73% with an overall eNPS score of +11. Although we just missed our target, the increase of 4 points in eNPS year on year is pleasing in a year of challenge and change.

A key focus has been on improving female representation across the Group, given the historic under-representation of women in senior roles in transportation. In the last year, female representation increased across the senior leadership teams in North America and ALSA.

Group Name Change

Concluding Remarks

As I reflect on my first full year as Chair, two things have struck me. Firstly, there is a need for us all to think differently about transportation in a world where private car use continues to dominate political decision making and remains the default mobility option for many consumers.

Secondly, we hear time and again about the climate crisis, with evidence of changing weather patterns and record global temperatures being hit in 2023, as well as the ongoing cost of living crisis. It is clear that public transportation has a very significant role in addressing both of these global challenges.

I am convinced that we have an important role to play in bringing these significant environmental and social benefits, and delivering value to shareholders. Each of our businesses have strong positions in their respective markets. Notwithstanding the challenges faced in some of our businesses over the last year, we are confident that they are well placed for future growth. This will be underpinned by a continued focus on reducing leverage and efficient capital allocation.

Last but not least, I am immensely proud of the commitment of our colleagues who have worked very hard to deliver safe, reliable and affordable services. I would like to express my heartfelt thanks to each of them for their contribution during 2023.

Read more about our governancefrom page 79

Read more about our Evolve strategyon pages 10 and 11

Shareholders will be aware that the Group was renamed to Mobico Group PLC in June 2023. The Mobico name better reflects the Group's international nature and its diverse range of mobility services, as we continue to lead the modal shift to mass transit.

The Group's operating subsidiaries retained their well- known customer-facing brands, including National Express, ALSA, WeDriveU, Peterman and Durham School Services.

Helen Weir Chair

21 April 2024

Mobico GroupAnnual Report and Accounts 2023

07

Our markets

Mobico Group is internationally diversified with operations in more than 50 key cities across

12 countries. We are a multi-modal business and currently deliver the following solutions in our markets:

Canada

Key

New locations

Contracted revenue

Passenger revenue

Multi-modal expansion

United States

and Canada

USA

United Kingdom Morocco and Ireland

Total revenue

£1,116m

Market size: £16.8bn

We are one of the largest school bus operators in the US and deliver student transportation in more than 33 US states.

In Canada, we deliver student transportation in the provinces of Ontario and Alberta,

with large-scale school bus operations in Toronto.

We provide large-scale, accessible paratransit services and fixed route bus services in major cities connecting communities and helping people to access work, education, healthcare and leisure across the US.

Through our WeDriveU brand, we deliver corporate and university shuttle solutions to providing employee travel solutions, and campus parking access.

Total revenue

£610m

Market size: £5.9bn

In the UK, National Express is the market leader in the country's intercity coach market, connecting cities, towns and airports across the country.

In the West Midlands, we operate large-scale urban bus services centred around the city of Birmingham in the largest bus network outside of London.

Our National Express Transport Solutions business provides accessible transport, B2B private hire and corporate shuttle solutions to clients.

In Ireland, we currently operate the Dublin Express with plans to expand further in the

near future.

Total revenue

£146m

Market size: £0.2bn

We are the largest urban bus operator in Morocco, with our ALSA brand operating over 1,700 buses across six cities.

This includes operations across five of the country's six largest urban areas, with major operations in Casablanca, Rabat and Marrakech.

08	Mobico GroupAnnual Report and Accounts 2023