The Go-Ahead Group plc Group The Go-Ahead Annual Report and Accounts for the year ended 27 June 2020 June ended 27 the year for Annual Report and Accounts Moving communities today towards a greener tomorrow Annual Report and Accounts for the year ended 27 June 2020 Our purpose is to be the local partner taking care of journeys that enhance the lives and wellbeing of our communities across the world 2020 overview • Results slightly above our revised guidance, with overall • Resilient business model – 90 per cent of revenues financial performance significantly impacted by secured through contracts with no revenue risk from COVID-19 in regional bus and losses in German rail changes in passenger demand – Regional bus heavily impacted by COVID-19, operating • Public transport remains critical to environmental profit* £20.5m (2019: £44.5m). Government support sustainability, economic recovery, the delivery of enabled breakeven performance since March health and wellbeing outcomes, and keeping – Resilient London & International bus businesses, communities connected operating profit of £48.5m (2019: £51.2m). Revenue • Robust balance sheet, strong cashflows and good liquidity protected by contracted income – Adjusted net debt to EBITDA of 1.96x**, comfortably – Rail operating profit* of £8.9m (2019: £25.4m) within target range of 1.5 to 2.5x and well below 3.5x impacted by lower contractual margins in bank covenant Southeastern and significant operational and commercial challenges in German rail – Underlying business remains cash generative – Unrestricted cash and unutilised facilities of c.£230m • During the COVID-19 crisis, we have three priorities: to at the year end has since increased to c.£240m safeguard the health and wellbeing of our colleagues and customers; to play our role in society in challenging • Committed to resumption of dividend payments times; and to protect our business when appropriate Operating profit (pre-exceptional items) Operating profit (post-exceptional items) Available cash and unutilised facilities £77.9m £20.8m £229.8m (2019: £121.1m) (2019: £104.3m) (2019: £282.5m) Adjusted net debt/EBITDA** Regional bus customer satisfaction Carbon emissions per vehicle mile 1.96x 91% 1.07kgs (2019: 1.32x) (2019: 92%) (2019: 1.15kgs) * Before exceptional items of £26.7m in regional bus and £30.4m in German rail businesses. Details are provided in Note 7 to the financial statements. ** On a pre-IFRS 16 basis, in line with bank covenants. Strategic report Compliance with Section 172(1) of the Companies Act 2006 report Strategic The directors confirm that, during the year, they continued to promote the Contents success of Go-Ahead for the benefit of all stakeholders. In doing so, the Board’s desire to act fairly between members, maintain a reputation for high standards of Strategic report business conduct, and consider the long term consequences of the decisions they 2 Our strengths take, have continued to underpin the way it operates at every level of the 4 Chairman's letter business. 6 Group Chief Executive’s review 10 Group Chief Financial Officer's review Read more about: 12 Group Q&A • Why and how we engage with our stakeholders, the key topics of engagement 16 COVID–19 during the year and how we responded, pages 22 to 25 18 Our markets 20 Our business model • The Group’s goals, strategy and business model in the Strategic report, 22 Our stakeholders pages 1 to 62 26 Our strategy 27 Our approach to sustainability • How we guided our decisions and behaviours in response to COVID-19, 28 Better teams pages 6 to 11 30 Happier customers • How we manage risks, pages 50 to 58 32 Stronger communities 33 Safer working • How our robust corporate governance principles underpin the decisions we 35 Cleaner environment take including how the Board considers stakeholders in its decision making 37 Business and finance review process, pages 64 to 68 39 Bus 43 Rail 47 Financial review 50 Risk management 59 Viability statement 60 Going concern Non-financial information statement We aim to comply with the Non-Financial Reporting Directive requirements. Governance The table below sets out where relevant information can be found within this 64 Chairman’s introduction to corporate governance report or on our website*: 66 Board of directors 68 Governance in action Reporting requirement and policies and Information necessary to understand our business 71 Board leadership and purpose standards which govern our approach and its impact, policy due diligence and outcomes 76 Evaluation 79 Nomination committee report Environmental matters 82 Audit committee report • Environment policy Cleaner environment, page 35 and 36 90 Directors’ remuneration report • Energy and climate change GHG emission, pages 225 to 227 113 Directors’ report • Approach to sustainability Our approach to sustainability page 27 116 Statement of directors’ responsibilities Employees Group financial statements • Whistleblowing policy Better teams, pages 28 and 29 118 Independent auditor’s report to the • Conflicts of interest Governance in action, pages 68 to 70 members of The Go-Ahead Group plc • Equal opportunities policy Nomination committee report, pages 79 to 81 135 Consolidated income statement • Code of conduct and ethics policy Directors' report, page 113 to 115 136 Consolidated statement of comprehensive income Human rights 137 Consolidated statement of • Human rights policy Better teams, pages 28 and 29 changes in equity 138 Consolidated balance sheet • Modern slavery policy Safer working, pages 33 and 34 140 Consolidated cashflow statement • Code of Conduct 142 Critical accounting judgements and key • Sustainable supply chain charter sources of estimation uncertainty 145 Notes to the consolidated Social matters financial statements • Charity and community policy Stronger communities, page 32 • Sustainable supply chain charter Safer working, pages 33 and 34 Company financial statements Anti-bribery and anti-corruption 201 Company balance sheet • Anti-bribery and anti-corruption policy Better teams, pages 28 and 29 202 Company statement of changes in equity Governance in action, pages 68 to 70 203 Directors’ responsibilities in relation to the company financial statements Principal risks and impact Risk management, pages 50 to 58 204 Notes to the company on business activity Audit committee report, pages 82 to 89 financial statements Description of the business model Our business model, pages 20 and 21 Shareholder information Non-financial key Non-financial key performance indicators, 222 Shareholder information performance indicators pages 28 to 35 225 Greenhouse gas emissions 228 Corporate information * Our policies and procedures are available on our corporate website www.go-ahead.com. 1 The Go-Ahead Group plc Annual Report and Accounts 2020 Strategic report Our strengths We are a leading public transport provider, keeping communities moving today as we work towards a greener tomorrow Clear and Part of the Experts in important solution our field purpose Integral part of climate Extensive experience change and air quality and expertise in bus Delivering vital services agendas in our towns and rail markets essential to society and and cities for economic growth • Ongoing government support • Recognition by policy makers • Largest bus operator in during COVID-19 crisis that mass transport is key to London with strategically underscoring the importance achieving air quality and located depots providing of public transport climate-related targets competitive advantage • Bringing our communities • Aside from walking and • Well established regional bus together, providing vital links cycling, rail travel is the most operator with a focus on to friends and family carbon efficient mode of urban areas transport, followed by bus. An • Essential to economic • Leading change and average journey by petrol car recovery, enabling access transformation as the emits 120 per cent more CO to work, education, leisure 2 operator of the UK’s busiest than the same journey by a and retail rail franchises diesel bus • Successful operations in • Leading industry change in Singapore, Ireland and Norway transition to cleaner transport, introduced the UK’s first all electric bus depot and our own innovative air-filtering bus technology 2 The Go-Ahead Group plc Annual Report and Accounts 2020 Strategic report Strategic “The strengths I observed early in my tenure as Chairman are attributes that have helped make the Group resilient during the COVID-19 crisis." Clare Hollingsworth Chairman A proven A reliable Strong approach partner financial Devolved customer Strong partnerships profile focused management, and collaborative Disciplined and innovative approach working with transport sustainable and engaged colleagues authorities and decision making policy makers • Agile and responsive local • 90 per cent of revenue • Robust balance sheet; adjusted management teams embedded generated through contracts net debt to EBITDA within in their local communities with transport authorities and target range at 1.96 times* optimising performance and industry partners • Positive cashflow and good award-winning customer service • A leading voice on the issues liquidity; c£230m of cash and • Continual improvement most critical to our business available facilities driven by an innovative and industry • Strong profile will support approach in all areas of • Integral to major infrastructure the resumption of dividend the business change projects in UK rail payments when prudent • Engaged colleagues delivered