23 February 2017 Full Year Results for the year ended 31 December 2016 Delivering strong growth from our diversified portfolio of businesses Our diversified portfolio has delivered another strong performance in 2016, with both revenue and profits up on a constant currency and statutory basis, improving returns and strong cash generation, and a growing dividend. We have seen particularly strong growth in our overseas markets both from acquisitions and organically. As we enter 2017, we have a number of tailwinds including the benefits from our successful refinancing of our bond, the full year effect of acquisitions and lower fuel costs. We have a clear strategy for growth and remain focused on disciplined capital allocation, with a strong pipeline of opportunities for 2017 and beyond. The strength of our business, coupled with the removal of our c2c franchise commitments, means we are both raising our annual free cash flow guidance to £120 million and we propose a 10% increase in the final dividend. On February 10th we completed the sale of c2c to Trenitalia. The results shown below from continuing operations, exclude the contribution from the UK Rail division in accordance with IFRS. Financial highlights Change at constant FY 2016 FY 2015 Change currency Continuing Operations Group revenue £2.10bn £1.75bn +20.0% +10.6% Group normalised operating profit £219.0m £191.8m +14.2% +4.8% Group statutory operating profit £185.2m £166.1m +11.5% Group normalised PBT £170.1m £148.4m +14.6% Group statutory PBT £136.3m £122.7m +11.1% Total Operations including UK Rail Group normalised PBT £175.0m £150.1m +16.6% Statutory profit for the year £120.0m £109.1m +10.0% Normalised EPS 27.3p 23.4p +16.7% Group statutory EPS 23.0p 20.9p +10.0% Free cash flow £138.6m £111.0m £27.6m Net debt £878.0m £745.5m £132.5m Full year proposed dividend 12.28p 11.33p +8.4% Our focus on operational excellence continues to deliver results • Strong growth in North America, with revenue and operating profits up 14.3% and 11.9% on a constant currency basis, with another successful bidding season • Record passenger numbers in Spain and Morocco, supporting revenue growth of 5.7% and operating profit growth of 5.3%, both in constant currency • Good performance from UK Coach and resilient results from UK Bus in challenging market conditions • First full year of our German rail operations, carrying over 20 million passengers and delivering operational improvements relative to the previous operator • Strong growth in passengers in c2c, up 6.7%, well ahead of average for London and South East, delivering revenue growth of 5.7% • All three UK businesses awarded the British Safety Council Sword of Honour, while ALSA has received the prestigious Prince Michael International Road Safety Award for its ‘Driving out Harm’ campaign in Morocco • UK Coach joins c2c with EFQM 5-star rating Page 1 of 51 We continue to deploy technology to drive efficiency and growth and raise standards • New real-time active revenue management systems fully installed in our UK and Spanish coach businesses, with positive early signs, helping to drive revenue, profit and incremental growth in 2017 • Continued investment in new mobile websites and ticketing apps to drive higher online transactions, conversion rates and lower costs • Contactless payment being enabled in UK Bus in 2017 • Continuing to roll out Lytx DriveCam technology across our businesses, helping to deliver a reduction in collisions and associated costs • Launch of a new free ‘infotainment’ system, VUER, in UK Coach, building customer loyalty and driving higher levels of customer satisfaction; trialling in UK Bus Growing through new business opportunities including bolt-on acquisitions • Completed 11 acquisitions in the year, all of which will be earnings accretive within the first 12 months: o 8 bolt-on acquisitions in North America, adding 1,100 school buses and 450 transit vehicles, with Ecolane, a paratransit planning and scheduling software provider delivering new contract wins since acquisition o 2 acquisitions in ALSA: 1 regional bus business giving us entry into Ibiza; and, 1 private hire transfer operator in Switzerland, providing entry to the lucrative ski and alpine tourist market and platform for expansion in complementary markets o Acquisition of Clarkes in UK Coach, building our commuter business and providing entry into the in-bound tourist market • Our North American acquisitions made in 2015 delivered an average ROIC of between 15% and 20% • Submitted bids to operate the Casablanca Tramway and Singapore urban bus • Actively looking at a number of attractive growth opportunities • Disposal of c2c to Trenitalia, freeing up capital for investment in higher growth markets Dean Finch, National Express Group Chief Executive said: “We have again delivered a strong set of results from our diversified group of international businesses and remain confident for our future prospects. Our focus on operational excellence is helping drive organic growth across the Group, and this is being complemented by significant returns from our recent acquisitions. We carried a record 921 million passengers in 2016 and will continue to invest in new technology to deliver ever-improving services to our customers. “With the recent sale of our c2c franchise, we have further opportunity to invest in our fastest growing markets which deliver strong returns, but we will continue to do so in a disciplined manner. We have developed a strong track record and team in identifying and completing acquisitions that generate significant value and we have identified a strong pipeline of further opportunities. Our confidence in the future is demonstrated by the increase in our annual free cash flow guidance to £120 million and the proposed 10% increase in the final dividend.” Page 2 of 51 Enquiries National Express Group PLC Matthew Ashley, Group Finance Director 0121 460 8655 Anthony Vigor, Director of Policy and External Affairs 07767 425822 Louise Richardson, Investor Relations Manager 07827 807766 Maitland Rebecca Mitchell 020 7379 5151 There will be a presentation and webcast for investors and analysts at 0900 on 23 February 2017. Details are available from Rebecca Mitchell at Maitland. Unless otherwise stated, all operating profit, margin and EPS data refers to normalised results, which can be found on the face of the Group Income Statement in the first column. Normalised profit is defined as being the IFRS result excluding intangible asset amortisation and tax relief thereon. The Board believes that the normalised result gives a better indication of the underlying performance of the Group. In addition, unless other stated, all pre-tax results and margin data refers to the Group’s continuing operations. Further details of discontinued operations can be found in note 6 to the Financial Statements. Constant currency basis compares the current year’s results with the prior year’s results translated at the current year’s exchange rates. The Board believes that this gives a better comparison of the underlying performance of the Group Further details of these measures are provided on pages 34 to 35. Page 3 of 51 Group Chief Executive’s Review Tragic accident in Chattanooga, Tennessee The tragic accident in Chattanooga, Tennessee on 21st November 2016 when six children lost their lives and others were seriously injured in a crash on one of our school buses has left six families grieving and a community in shock. It has had a profound impact on us all at National Express and we are deeply sorry that such a horrific accident should happen to children aboard one of our vehicles. The North American management team, working closely with the local school board and community groups, swiftly offered appropriate support to the families affected. We have also offered our full co- operation to the investigations being led by the regulatory authorities that always follow an accident such as this. Without prejudicing the outcomes of these investigations we have accelerated programmes that were previously being piloted in our North American division as part of our long- standing determination to deliver industry-leading safety performance: an industry first, Lytx DriveCam will be installed on our North American vehicles by the end of 2019; and, a cloud-based portal recording communication between us and school administrators will be available for every location before the end of 2017. None of us at National Express will ever forget the terrible accident and tragic impact on the friends and families of those children who lost their lives or were injured. But it only reinforces – if any reinforcement was ever needed – why safety will remain my priority as Chief Executive, as I have consistently made clear in previous statements and at our annual general meetings. While we have of course pledged to learn any necessary lessons from the investigations, I have also commissioned our independent safety consultants Arthur D Little to identify best practice in driver recruitment, training and assessment and review our procedures in all divisions to identify what further progress we can make to be consistently industry-leading. They will report back by the middle of the year. Introduction Financially, National Express delivered strong growth in 2016, with revenue, profit and cash all growing significantly. Indeed, National Express delivered a record statutory profit of £120 million – itself a doubling in the last two years - has grown earnings per share by nearly 17% and increased return on capital employed by 20 basis points to 11.9%. This strong performance coupled with the removal of our c2c franchise commitments, means we are both raising our guidance for future free cash flow to £120 million and proposing a 10% increase in the final dividend. We believe our diversified international businesses and clear strategy has provided us with strong momentum and will continue to deliver growth in 2017 and 2018.