Mobico Group Plc (MCG) Earnings Call Transcript & Summary

Hello, and welcome. I'm delighted that you have joined us for our first Capital Markets Day in many years. I have spent the last 11 months conducting a thorough and comprehensive business review, truly understanding what the group stands for, assessing the depth and breadth of the talent we have and taking a critical, dispassionate look at the current portfolio and the opportunities ahead of us. Today, we will take you through this. I know that the recent Stagecoach transaction has grabbed the headlines, but the focus of today is to outline our stand-alone group strategy and growth prospects, which we are very excited about. But before we get into the meat of the day, let me give you a sneak preview of the slide we're going to end this presentation with, the investment case. There are 6 reasons to be excited about the future. First, we have long-term sustainable structural growth opportunities, from the modal shift, to public transport. More and more cities need our services. They share or decide to deliver cleaner, greener, livable spaces. This cannot happen without shared mobility. These are the services and solutions we offer. Second, as we will outline today, we have 5 compelling, hard-to-replicate customer propositions to leverage this growth. Third, we are the best-in-class operator. This means we do the things our customers value and would pay for, better than anyone else. Fourth, as you know, we are uniquely diversified and balanced, providing resilience as well as a platform for future growth. Fifth, we're driving environmental leadership, an issue of vital importance to us all. I will expand on our group commitments later in this presentation. Finally, we have a track record of delivering strong financial outcomes. And as Chris will show later, we expect more of the same. To start us off, I'm going to play a short video to remind you of the role shared mobility will play in society and how this anchors our purpose and vision. [Presentation]

I hope you can see why I'm excited about the future. Let's take a look at the agenda for today. I'm going to spend a few minutes recapping the basics of the group before walking through the evolve strategy. I will then hand over to Tom, Gary, Paco, to take you through a little more detail on each of our 3 divisions on how they're executing Evolve. Chris will then outline the 5-year profitable growth ambitions for the group before a quick summary and close. The full agenda will take around 2 hours, including time for Q&A. National Express is the only U.K.-listed internationally diversified multimodal transport provider. We operate in North America, Europe, Northern Africa and the U.K., with the school bus, urban and regional bus, long-distant coach, corporate, shuttle or transit and limited rail services in Germany. The chart shows the pre-pandemic scale of the group, which we expect to at least much in 2022. As you can see on this chart, we are reasonably well-balanced across each division, where 50,000 employees operating in 50 cities and 11 countries provide close to 1 billion annual passenger journeys on 32,000 vehicles. And importantly, our transport services remove about 0.5 billion car journeys a year. The group's revenues are also underpinned by high-quality contracts. Although National Express is known for its retail coach business, in fact, over 60% of revenue is contract-based, with very little customer concentration risk. This global diversity of contract-based businesses is a very significant differentiator of the group. A business of this scale and scope requires talented leadership, and I am blessed with an exceptional executive team with extensive transport experience. Together, we also have vast experience in safety and winning new contracts, in M&A, in operations and in implementing market-leading technology. Before we get into more specifics, let's take a look at the backdrop. It really is an exciting time to be in public transport. The demographics are favorable in the areas in which we operate. Birmingham, where our U.K. bus business operates, is the youngest city in Europe and is growing. Millennials are more inclined to use public transport. Owning a car is no longer the right of passage that it used to be, and younger generations are more concerned about the environmental impact. The cities in Morocco are also growing quickly. And in North America, an aging population supports growth for a paratransit business. Modal shift into public transport is also key to social mobility, which is a focus of governments around the world. Public transport connects people with places of work, education and health care. The cost of using a bus is around 1/4 of what it costs to own and run a car. And after many months of restrictions, there is pent-up demand for travel. A McKinsey survey in July revealed travel to be the second-most desired activity as we exit the pandemic. And in the U.K., the owner of the U.K.'s largest Holiday Lettings website said in September that U.K. holiday bookings for summer of 2022 are up 82% on the same period in 2019. Government support for public transport is better than ever, with policies and investment to encourage modal shift out of private cars. In the U.K., there is the recently unveiled National Bus Strategy, with GBP 3 billion of investment, including support for at least 4,000 more zero emissions buses. In the U.S., there is a $1.2 trillion infrastructure package, including $39 billion of new investment to modernize transport and to improve accessibility for the elderly and for people with disabilities. In Spain, there is a EUR 13 billion planned by the government to boost the transition to electric vehicles. Pre-pandemic, cars generated 70% of EU surface transport emissions. Modal shift is key to decarbonization, and this is going to be a hugely positive factor for public transport in the coming years. Shortly after joining, I kicked off with our business review, leveraging the local know-how and experience across our group with selective use of external experts to stimulate and challenge our thinking. We really challenge ourselves on some big questions. What is our purpose? Where do we operate? What products do we want to offer? How do we deliver? We started with an open mind. Through the process, we were keen to do 2 things: first, challenge ourselves on the existing portfolio; and second, get all the growth opportunities on the table and rank them according to risk-weighted returns potential. While we have trimmed and streamlined our existing portfolio of contracts, which will deliver a more profitable base, we truly believe that we are in the right places, offering the right products. Our current portfolio is strong. Our initial list of opportunity added up to over GBP 4 billion of growth initiatives. We didn't set about how to prioritize the growth initiatives. We went through a rigorous process to understand the truly addressable market size for each opportunity or ability to execute or ability to scale and most importantly, the ability to make money, to deliver sustainable profits and cash flows. This yielded a near-term pipeline of GBP 1.5 billion of revenue opportunity, primarily in North America and ALSA. This pipeline excludes Stagecoach. I'm sure you will have a number of questions about our proposed combination, and we will touch on this throughout the session. But put very simply, I see the proposed transaction as an accelerator of our strategy, generating capacity to go after these growth opportunities at even more pace, while at the same time, deleveraging the balance sheet. So let me start with our vision. We want to be the world's premier shared mobility operator, with services offerings leading safety, reliability and environmental standards that customers trust and value. Subtly shifting from mass transit to shared mobility reflects the reality of what customers want and cities need. But fundamentally, it is still about moving people through cities more safely and efficiently that can't be done by car. So our vision is embedded in our purpose, to lead the modal shift from cars to public transport. I'm now going to outline our strategy to deliver this vision before diving deeper into each aspect. Rather than focus on products such as school bus, urban buses, coach, et cetera, we have still the solutions that will solve the problems cities face in the 21st century. We will deliver on our purpose and vision through our 5 compelling, hard-to-replicate customer propositions: first, reinvigorate public transport, rebuilding confidence in the public transport system by offering high-quality operations that passengers want to use; second, multimodal expansion, expanding the breadth of our product offering based on our global know-how and local relationships; third, operational transformation, driving growth by delivering transport solutions more efficiently than our competitors; fourth, filling the transit gap, helping businesses and see this transition from the private cars in places that are not well served by existing mass public transport; and fifth, consolidating and compounding fragmented markets, to bring the benefits of scale and consistent service. These propositions are underpinned by our focused applications of technology. This is not technology for the technology's sake. This is about careful targeted investment into a proper technology that really makes a difference to the outputs we are driving for. Which leads us onto the opus of this strategy, superior outcomes for all our stakeholders. We aim to be the safest, the most reliable, the environmental leader, have the most satisfied customers and be the employer of choice. I'm absolutely confident that delivering this output will deliver growth because these are the things that matter to our customers and as such, will deliver profitable growth. Through the next few slides, I will take you through each layer of this strategy, starting with the 5 customer propositions. Each of these customer propositions will deliver growth. Let's go through them. Reinvigorate public transport is about rebuilding confidence in the public transport system by offering high-quality operations that passengers want to use. Look at Morocco, we -- where we reversed declining ridership. And in Birmingham, we consistently outperformed the U.K. passenger trend. We are the partner of choice for delivery transport solutions. This particular customer proposition is one of the most likely entry points into those other 150 cities in which we do not currently participate. Authorities are looking for a trusted partner to transform the experience for the citizens. This is how we recently entered Portugal, and we are currently bidding for the large contracts in a number of new locations. Let me show you a video to illustrate what I mean. [Presentation]

Our next customer proposition is multimodal expansion. This is about expanding the breadth of our product offering in places where we already have an established presence, combining local relationships with our global know-how, for example, using our power transit expertise from North America to help develop our Accessible Transport business in the U.K. We see significant opportunity to offer more products in the places where we have a strong geographical presence. This delivers both cost and revenue benefits. Taking cost first. An example is our Coventry depot in the U.K. From one side, we are now operating urban buses, long-haul coaches and accessible transport minibuses. Once we have got an established presence, the economics of adding service offerings while utilizing our existing infrastructure is compelling. To give you an example of the revenue opportunities, we first established our presence in New York through a school bus, to which we added power transit, followed by private charter and corporate shuttle. So that's for services offerings, each of which we have grown. In 4 years, we went from 0 to $100 million of revenue in New York. Moving to operational transformation. Put simply, this is about delivering transport solutions better and more efficiently than our competitors. When we take over operations, we have a playbook, the NX Way, a globally consistent set of processes that can be rapidly implemented and scaled and that drive outcomes that matter to our customers. When we deliver this, we drive real change. Opportunities include implementing our operational blueprint at scale across fragmented and inconsistent operations, such as in a school bus; turning around under-invested networks as we have done in Morocco; and modernizing operations like our Accessible Transport division in the U.K. In order to deliver this transformation, we have implemented a consistent global quality management framework that we are upskilling our workforce on. We have commenced training over 1,500 colleagues in this quality management framework across all our core divisions. Let me now show you a video that -- to illustrate the power of operational transformation. [Presentation]

The fourth area where we excel is filling what we call the transit gap. This occurs when the existing public transport system does not match demand. It takes a long time to build a new railway. Our employee shuttle business is an example of how filling the transit gap solves a very real need. It is flexible, adaptive and dynamic. It is helping businesses and cities transition from the private car in places that are not well served by existing mass public transit. This can range from providing full commuter services, to bridging the last few miles between a public transport stop and an office campus. We are also focused on fulfilling intercampus travel for customers such as universities, hospitals or large corporates, who have multi-properties over a widespread area. There's a big opportunity here. It is a $2 billion market in the U.S. alone, and we see increasing demand for these services throughout the rest of the world, including the U.K. and Spain. Our final customer proposition is the consolidation of fragmented markets. And we operate in a number of fragmented markets across the group. In U.S. School Bus, for example, after the 4 biggest competitors, there is a long tail of local operators. Over a number of years, we have been acquiring this at attractive multiples and then plugging them into our system. For instance, procurement and insurance take out duplicated back-office costs and drive returns averaging around 15%. We have replicated this in the urban and regional bus in Spain and more recently, in Accessible Transport and Transport Solutions divisions in the U.K. We also have a strong track record in selective larger acquisitions. In 2012, for instance, we acquired Petermann for around $250 million. It has been fully paid back in cash and has left us with a recurring annuity-like profit stream, from the 99% of contracts retained since acquisition. Our 5 customer propositions are digitally enabled by a suite of technology. In this context, technology means all of the following: using automation tools to streamline processes, making us more efficient and driving down cost; adopting artificial intelligence to solve problems and spot patterns better and faster than humans can, we already use AI in pricing and some of our safety applications; embracing best-in-class third-party solutions and crucially driving their successful implementation at use; using data to make better, quicker, more informed management decisions. We believe that it is the way in which we adopt and implement technology that give us the edge in the market. One example of how we make use of technology to be the safest is the use of a speeding control technology that links data and telematics to give us real-time information. The image on this chart shows what we can see in our control centers. We can use this to take immediate corrective actions and also later on in training and development of drivers. On the right-hand side of this page is an example of how technology supports us being the most reliable. It shows an image of the network optimization software we use in our U.K. bus business. This was developed in our own innovation center and it monitors running times and traffic patterns, helping to take out running time and therefore cost as well as improving punctuality. It will require hundreds of manual analysts to do the same job that this does for us. The results are impressive, 45% reduction in late buses and 2% driver cost savings from some of our high-frequency routes. Success comes from the rapid adoption and implementation of the right technology to improve a specific outcome, not for the sake of technology itself. The final layer of our strategy is the outputs that we are seeking to achieve. I will take you through the first 5 of these now, and Chris will take you through the financial returns later on. Firstly, the safest. We will lead the industry in safety by continually driving down the number of accidents and incidents. We monitor this through a measure pioneered in the rail industry, which we feel hold us to the highest possible standard, FWI. This stands for Fatalities Weighted Index and assigns a numerical score to each level of severity of incidents. Our goal is simple, to drive a reduction in this number every year. And we're starting from a very low base as you will see. You have seen this slide before, but I make no apology for that. We're proud to have reduced FWI per million miles by 98% over the last decade. The second chart here is the risk score compiled by Lytx, the provider of DriveCam, and put simply, shows that we are the safest across the universe of operators they work with and widening the gap. I'll now show you a video to expand on this. [Presentation]

As you can see from that video, safety is and will remain our #1 priority. As a provider of transport services, we also know that reliability is key, where passengers need to be able to plan with confidence, to know they will get to work or school on time, where passengers experience unreliable services, they have to add more contingency time into their journeys, reducing the attractiveness of the service compared to the car. Reliability is key for our contract customers as well. As I told you before, the 6 outcomes we have defined are the things that matter to our customers. To bring this to life for you, the chart on this slide shows how customers in some recent contract tenders awarded quality marks in assessing the bids. If you don't get quality right, you compete only on price. Nearly 60% of quality marks were available for being reliable. By being the most reliable, we give ourselves a competitive edge, driving customer retention and powering growth. The benefit of this is lower cost because our services are more efficient and higher customer satisfaction. Moving on to the next outcome, we will be the environmental leader by leading the transition to zero emission vehicles. Whilst we are focused on all aspects of our environmental footprint, as vehicle emissions account for 95% of the group's Scope 1 and 2 emissions, this has to be our focus. Nearly 100% of our diesel bus fleet in the U.K. and around 50% of our ALSA diesel bus fleet is Euro VI compliant, which is the cleanest variant of diesel engine that you can get. Euro VI vehicles emit fewer emissions than a private car. Nonetheless, we want to go much further, and we are committing to the most ambitious zero emission fleet target. Last year, we launched our targets for the U.K. bus and the U.K. coach fleet to be zero emissions by 2030 and 2035, respectively. We are now adding targets for the other regions and the whole group. In Spain, we are targeting the bus fleet to be zero emissions by 2035. We are then targeting the Spanish coach, Morocco and North America, to be zero emissions by 2040. So that means an entirely zero emissions fleet by 2040. And it is not just about vehicles. We are targeting all Scope 1 and 2 emissions to be net zero by 2040. For clarity, this is before the hugely positive impact we can make on emissions more widely from modal shift, from private car to shared mobility. We have committed to never buy another diesel bus in the U.K. And in fact, we are not buying electric buses again either. We have worked with various stakeholders to enable us to fulfill our vehicle requirements through availability contracts, meaning no capital expenditure, a faster transition, less technology risk, no residual value risk and a stronger balance sheet. Chris will expand on this later. So this is good for the environment, good for the passengers, good for cities, good for our shareholders. Moving on to most satisfied customers. Satisfied customers drive profit. Satisfied customers are also less likely to put contracts out to tender. They are more tolerant of the inevitable issues that do arise and so are less inclined to impose contractual penalties. We start from a strong base in this area. We have consistently improved our customer satisfaction measures in the U.K., Spain and North America. We have been recognized as the best transport company in Spain and the #1 transport brand in the U.K., with an excellent rating on Trustpilot. We also note that happy customers drive margin, improve contract retention and will recommend us to others. We have said before, for example, that our customers in North America School Bus, who rate us 5 out of 5 are with us longer and have a higher margin. We have improved the percentage of customers who rate us 5 out of 5 from 46% to 66% in the last 3 years, with improved ratings even through the pandemic. Over the next 12 months, we will refine and standardize the measurements of NPS across the group and set a target for top quartile benchmark performance. Our people are the heart of our business. We employ 51,000 colleagues who keep our customers connected and moving every day. I'm very privileged to lead each and every one of them. Our ambition is to become an employer of choice across all our markets, and my aim is to create a culture based on transparency, empowerment and meritocracy. We will achieve this ambition by building on strong foundations. However, we need to make improvements, like all good companies, to deliver this goal. To be an employer of choice, we need robust performance management processes, strong talents and development programs as well as an environment which enables pioneer thinking. We also need to build a diverse workforce. We operate in 11 countries around the globe, and diversity is in our DNA. Diverse teams make us think better, perform better, deliver better passenger experiences. We take employee engagement incredibly seriously. And recently, we have standardized our engagement survey tools across the globe as we track towards our target of upper quartile engagement. By listening to our people, building world-class people processes and creating a culture of meritocracy, we will become an employer of choice. I want National Express to be a company where people want to join and love to stay and develop. To summarize our Evolve strategy, our vision is to be the world's premier shared mobility operator. This is grounded in our purpose, to lead the modal shift from cars to public transport. We will do this through our 5 customer propositions, all underpinned by the focused application of appropriate technology. We will measure our success against a range of outcomes, ensuring we are delivering for all our stakeholders. Strong and consistent financial returns is a critical aspect of this, and Chris will cover that before we wrap up. Before I hand over to our divisional leaders, let me say a few words about the planned Stagecoach transaction. You will appreciate that at this stage, we are somehow constrained in what we can say. Discussions are ongoing, and there can be no certainty that this combination will necessarily happen. But the Board of National Express and Stagecoach believe that the combination of our 2 companies would be a strategically compelling proposition with significant growth and cost synergies as well as delivering a strong value creation for both sets of shareholders. I see the proposed transaction as an unparalleled opportunity for value creation. PwC, the reporting accountant, has signed off on grounded sensitized synergies of at least GBP 35 million per year. And there are revenue synergies on top of that. The transaction will generate capital capacity to accelerate growth opportunities in ALSA and North America, firstly, because the pro forma balance sheet will be lower-geared, creating headroom to our target-gearing threshold; and secondly, as those synergies throw out cash. These, of course, accelerate our deleveraging as we recover from the pandemic and facilitate a faster return to paying a dividend. We target restating the dividend in 2022. Not only does it accelerate our strategy and fuel profitable growth in ALSA and North America, it also creates a leadership position in an increasing bus-friendly U.K. market ahead of the GBP 3 billion National Bus Strategy funding becoming available. That's all from me for now. I will come back to close the session. We will now turn to the divisions, starting with ALSA, so I will hand over to Paco and see you later.

Good afternoon, everyone. I'm Francisco Iglesias or Paco. I will now take you through the ALSA business, starting with a video to give you an overview.

ALSA is a very diversified and well-balanced business because we are operating in all kinds of products in transport by road as long distance and regional services, also in urban and metropolitan services, additionally, in school transport, employee shuttle and occasional services. So this is a very well-balanced portfolio. We have an iconic and local brand, with over 90% top of mind. Our vision is to be a sustainable multimodal and connected mobility operator. This sustainability is a key point in the strategy of ALSA, is linked to the policies of the European Union with the Green Deal proposal, and we have a clear commitment in terms of the sustainability of the fleet. Additionally, we are advancing in the autonomous driving. The main markets for opportunities in Spain, one is the transport in urban and metropolitan areas, and the other is the segment of occasional services, tourism-related, because this is a very fragmented market, with good potential for mergers and acquisitions for ALSA.

ALSA has been transformed from a family company as it was like 10 years ago, to be part of a national and international company. So this basically proves that we have been able to adapt very quickly and very well. Both ALSA and National Express have a very solid and a very disciplined growth strategy. We prioritize profitability over size or over volume. They must be scalable. We discard isolated opportunities.

ALSA Morocco is a successful story. We started in 1999 with the urban and metropolitan contract in Marrakesh. And now, we operate 5 of the largest transport contracts in Morocco. We operate this service with 1,700 buses and 7,500 employees, 99% of them Moroccan, to transport over 300 million passengers per year.

We have gained the trust of the authorities. And this is key for us. We have a very particular way to interact and to meet customer expectations and requirements.

ALSA and Bilbao [Foreign Language]

I believe also that our values, ALSA values, the ambition for growth, the local knowledge, the way we do things, the way we interact with the authorities really suit very well with the vision of National Express. I believe ALSA is one of the growth engines of National Express. And if I were to define ALSA in just one word, I would say, reliability, and I think that's something that National Express really values because we have always delivered what we have promised.

As you have just seen in the video, we operate in a number of attractive markets and have the potential to grow significantly from where we are today, both organically and via acquisition. I would now like to show some examples of the group's 5 customer propositions in ALSA. Firstly, how we reinvigorate public transport. You have already seen the example of Casablanca a little earlier. And on the next slide, I will show you another example in Bilbao. Then after that, I will demonstrate multimodal expansion in Madrid. Bilbao is one of several cities where we have reinvigorated public transport. Under the previous operator, the urban bus service was performing very poorly due to continual strikes and service interruptions, a lack of spare parts and maintenance causing frequent vehicle breakdowns, poor relationships with the City Council and poor financial results with heavy losses. After ALSA took over the contract, there were significant and rapid improvements. First and foremost, safety. We achieved a 70% reduction in the rate of accident at fault through the implementation of our group safety policies and technology. We quickly improved labor relations, generating trust through the employee committee with a number of collective agreements being signed over the period and no strike for the past 6 years. The quality of service rapidly improved, as evidenced by punctuality, reliability and improved image. This resulted in our Bilbao operations being recognized as the Urban Transport Company of the Year. And the strength of our relationships with the local authorities is demonstrated with the successful renewal of the contract in 2019 for a further 10 years and with multimodal expansion through tourist bus services. Moving on to Madrid, where we have successfully implemented multi-model expansion. In 2005, National Express acquired ALSA. And shortly after in 2007, we made the acquisition of Continental Auto, which expanded our urban bus business in the city as well as adding some long-haul routes running to Madrid. In 2011, we won the contract to operate sightseeing tours in Madrid. While in 2015, we expanded our urban bus operation further. In 2016, we entered the taxi and car transfer services market through our partnership with Uber and our own ALSACab business. In 2017, we entered the corporate shuttle market with the acquisition of Maitours, running services for the likes of Iberia and Santander. In 2018, we again expanded our exposure to urban bus through the acquisition of ArgaBus and launched further private car services through our partnership with Cabify. And most recently, in 2020, we launched an autonomous bus services at the University of Madrid. So you can see that over the years, we've added many types of services, and we have done this through a mix of organic growth, bidding for contracts together with a number of strategic acquisitions. And this means that we are able to achieve significant benefits and efficiencies. Examples include greater fleet utilization as we are able to share across different aspects of the business as well as shared depots, providing services for our long-haul, regional and urban fleet. Of course, all of this is served by centralized marketing and operation teams. Turning to the growth opportunities we see ahead of us, starting with Spain. Here, we believe the wider public transport market will provide a positive backdrop for passenger growth as government policy will promote the use of public transport and restrict mobility for private vehicle in its drive to meet its decarbonization targets. For some years now, we have been increasing the focus in our business toward the urban and regional markets. Long-haul now accounts for less than 20% of our revenue versus 2/3 in 2010. We continue to see attractive opportunities to grow market share in urban, growing the proportion of revenue-protective contract within our business mix. We are already the market leader in the regional market with 15% market share, a market which is highly fragmented and where we have competitive advantage through the synergies from the connectivity with our long-haul network. We are also looking to build our exposure to tourism, charter services and corporate shuttle sector, leveraging our existing operation as much as possible. This is the multi-modal expansion strategy that we talked about on the previous slide. And we have a strong pipeline of opportunities with over GBP 250 million of annual revenue in upcoming tenders and acquisition targets over the next 18 months. In Morocco, there are opportunities to win contracts in other cities. We are focusing more on the cities which we have opportunities for revenue-protected contracts. We also see opportunities within our existing contracts, where local authorities may be looking to introduce changes and are keen for us to help find the solution. A good example of this is the proposed bus rapid transit service in Agadir. Intercity is clearly a market which we know well in Spain, and we believe Morocco represents very interesting opportunities. Long-distance travel in Morocco is not well served with limited intercity rail network. So the main option is by road. This market is currently worth EUR 300 million, and it's very fragmented with only a handful of operator at scale. And we also see many opportunities to grow our international business. Last year, we won 2 contracts in Portugal, which we are currently mobilizing and which we'll also start in 2022. And we see opportunities to grow in other countries in Europe, where we can see attractive tenders opportunities coming up in large cities with a pipeline worth over GBP 100 million in high potential European cities. So overall, plenty of opportunities. I'll now hand you over to Gary.

Good afternoon, everyone. I'm Gary Waits, CEO of the North American business. I'm delighted to have the opportunity to tell you about our business, how it aligns with the group's strategy, and the exciting opportunities for growth. I'd like to start by showing you a video that gives you an overview of our business and introduces you to some of my team. So in North America, we have 3 product lines. We have school bus business, where we're the #2 school bus provider in the $25 billion school bus industry. We also have transit business, where we provide fixed-route and paratransit services for transit authorities. We're the #4 competitor in that $25 billion industry. And we're also the largest competitor in the fast-growing corporate shuttle market with our WeDriveU subsidiary. There's approximately 460,000 school buses in North America. About 1/3 of that is outsourced. And of that 1/3 that is outsourced, we operate 17,000 buses, and that's across 34 states in 3 provinces in Canada. The school bus business is a business where service is important. Getting the kids to school on time and ready to learn is essential for the functioning of a school. So this is an industry that will pay a premium for high-quality service like the service that National Express provides. It's also a highly fragmented market, where there is opportunity to either win business off of other competitors or acquire those competitors and drive efficiency through their operations. We've been on the forefront of technological innovations that have affected the school bus industry, from being the first company that put in DriveCam, to GPS and monitoring of our buses, to electronic routing. We are the professional, high-quality operator, and we're well positioned to professionalize in-sourced operations but also win business. We'll acquire smaller competitors where we can professionalize and bring our technology and efficiency to improve the operation. In addition, there's a large amount of in-house operations that can be further outsourced, again bringing professionalism and efficiency to the operation.

The transit industry is a $25 billion industry and market, and we're just scratching the surface, and I think there's a lot of opportunity and upside for growth. We're operating in 21 cities right now, and there's multiple cities that we can expand to and create a bigger footprint as well. We've grown transit pretty aggressively over the last couple of years, mainly focusing on paratransit, which allowed us to secure some long-term contracts in some of the biggest metropolitan areas in the United States, that being Boston, Chicago and Washington, D.C. Paratransit is a government-mandated system that requires anybody running fixed-route service to provide a complementary service to anybody with a disability or otherwise who would be unable to ride fixed-route services. We do paratransit really well. We've also established a really experienced business development group and operating team that will allow us to retain our current contracts but then also go into these new contracts and win them with our best foot forward. When National Express wins a paratransit contract, we usually renew that contract. This is represented in Boston, which we just renewed for an additional term, and Chicago as well for another 10-year term.

So WeDriveU provides B2B commuter shuttles. What I mean by that is we help employees commute to and from the office, help them stay productive during the commute with robust WiFi. And when they arrive on the campus, we reduce parking congestion. We have contracts with some of the biggest companies in the world, companies like Google, Facebook, Apple and Tesla. We also have contracts with universities like Princeton University and Northwestern. Today, we're focused primarily on the corporate shuttle market, where we have about 20% of the market. We also are focused on the university sector, which is a sizable market. We only have 1% market share. So you can see we have tremendous upside opportunity. With the university sectors, we align nicely with the private universities as they align perfectly with our value propositions, and we're learning to work with public universities that contract with transit to find overlapping opportunities with the transit division. As we continue to expand throughout the United States, we're constantly looking to leverage school bus and transit infrastructure to enable multimodal expansion. WeDriveU differentiates from its competitors through its customer success teams who continually work to improve the passenger experience through service and technology planning, reporting and analysis all for the customers. From a sustainability standpoint, our customers are the leaders in getting their fleet to be zero emission. Because of this, we've been actively working to transition our fleet to electric. Today, our fleet is 11% electric. And by 2030, our intention is to have our fleet 100% electric.

As you have just seen in the video, all of our businesses have strong positions in their respective markets, each of which present attractive growth opportunities, both organically and via acquisition. But before we look at the growth potential, I want to show you some examples from North America of the group's 5 customer propositions. You have already seen in the video earlier an example of how we have deployed operational transformation in our school bus business through our Driving Excellence program. In the next couple of slides, I will show you, firstly, how we have successfully expanded on a multimodal basis in Chicago; and then secondly, how our shuttle business, WeDriveU, is filling the transit gap. We first entered Chicago with the acquisition of CDT in 2017, which provided entry into the paratransit market. Since then, we have rapidly expanded our offering across Chicago, entering the student transportation market and the charter services market. And we have also expanded our presence in paratransit, winning the South Cook County contract. So having no presence in Chicago before our acquisition of CDT, we now have around $70 million of revenue across a number of complementary business lines. This is driving efficiency benefits through shared infrastructure, facilities, including depot and maintenance and driver and vehicle pools. This image shows you the different types of vehicles we run from our Chicago depot, ranging from small vans for school bus through to medium vans for paratransit and coaches for charter services. Turning to filling the transit gap. Shuttle is all about filling the transit gap with private transport solutions where public transit is not an option, providing environmental benefits by removing private cars from the road. We entered the market in 2019 through the acquisition of WeDriveU. We are providing a vital service to large and fast-growing corporates as they continue to develop and expand their campuses. Our customers want to attract the best talent, and providing high-quality commuter services is a key part of employee attraction and retention. We provide a range of services tailored to each customer from full end-to-end commute through to last-mile connectivity to intercampus shuttles. Now moving on to growth opportunities. Starting with school bus, we believe there are both organic growth and inorganic growth opportunities in this large and fragmented market. Indeed, we see over GBP 300 million worth of annual revenue from upcoming opportunities over the next 18 months. We see potential for market share gains in the upcoming school bidding season, which we expect to be significantly larger than normal given the high level of contract extensions in the previous bidding season. We believe that smaller local operators are likely to face financial challenges and that some will not be in a position to bid for those contracts as they come up for renewal. Continued pressure on state and local government budgets, coupled with evermore complex operational challenges, may well lead currently in-sourced school board districts to conclude that it's more cost-effective to outsource, especially for those who need to reinvest in the fleet. Even without any step change in conversions, the outsourced market is forecast to grow at 3.5% per annum through to 2030, growing from $8 billion today to over $11 billion by 2030. We also see opportunities to grow our private charter business, where our market share is relatively small, representing only 4% of our school bus revenue. Margins are attractive, and we are targeting 50% growth in charter over the next few years. We also see significant growth opportunities in the transit market. Our sweet spot is paratransit, where an aging U.S. demographic is supporting growth at over 4% per annum. Over the past 5 or 6 years, we have grown our paratransit business rapidly largely through acquisition, gaining significant contracts in Chicago, Washington and Boston. We have subsequently gone on to renew those contracts with greater market share and improved margins as customers value the high standards of service that we deliver. Our track record with these contracts provides the credentials to bid other large-city paratransit contracts. There are significant bidding opportunities coming up in the next few years, and we are fostering relationships with the relevant authorities well ahead of the individual bidding processes. Overall, we see a targeted pipeline of GBP 250 million of annual revenue in upcoming bidding opportunities over the next 18 months alone. Turning to shuttle. As I said earlier, we entered this attractive growth market in 2019 with the acquisition of WeDriveU, a business which achieved rapid growth leading up to the pandemic, and the corporate shuttle market is still expected to grow by around 4% per annum. WeDriveU's strong growth in corporate shuttle has partly reflected the growth of our customers where we have developed deep relationships over the years with the likes of Google, Facebook and Tesla to name a few. The good news is that they continue to grow fast despite potential changes in office working patterns, expanding their campuses and workplaces to accommodate a growing workforce. To date, the vast majority of our business has been centered in California. However, going forward, we see more opportunity now to grow with our existing customers outside of our current footprint and to leverage the wider geographic footprint of our school bus and transit operations. We also see significant growth potential for shuttle in the university sector with the market forecast to grow by around 3% a year through to 2030. We're already building our credentials here, with the recent example being the successful launch of services with Princeton University. We have a strong pipeline with contract bidding opportunities of over GBP 150 million coming up in the next 18 months alone. And lastly, decarbonization of the fleet is becoming an increasingly more important factor for customers in the shuttle market. We have strong and growing credentials here with over 120 zero-emission vehicles in our fleet already. So it's an exciting future ahead of us in North America. I'll now hand you over to Tom.

Thanks, Gary. I'm Tom Stables, CEO of the U.K. and German divisions. I'm pleased to have the opportunity to give you a flavor of how we align with the group's strategy and the opportunities for growth. I'll also touch briefly on the potential combination with Stagecoach. But first, I'd like to start by showing you a video that gives an overview of our business and introduce you to some of my team.

National Express white coach is an iconic brand with huge brand recognition. 96% of people in the U.K. know exactly what it is. For the last 7 years, pre-COVID, we had super year-on-year growth, and we can see that returning to the market. It meets a real niche that people want. It gives great value passenger transport across the U.K. that everybody can use. And in fact, 1 in 10 people in the U.K. use it. It's safe. It's high quality with great customer regard, and it's great value. It's low investment for the business, and we don't have a huge asset base to maintain. It's primarily a digital and marketing proposition where we make sure we put the routes in the right place and we sell them with smart pricing and smart marketing. We put our money into key things: safety, digital, pricing, the things that will drive value from the business.

U.K. bus business right here in Birmingham and the West Midlands, we're the biggest single operator commercial bus network anywhere in the country. Before the pandemic, we were growing patronage, speeding up our services, investing in our fleet and working well in partnership with our local authorities. We were cutting fares, growing revenue, growing patronage, pioneering different ways of working, a model that, I think, will work very well elsewhere in the country as well. We're making travel cheaper and simpler for our customers. We've rolled back our fares to 2012 prices. We were the first with daily capping, with weekly capping. Over 70% of our customers are now paying using digital channels, which is ideally suited to the youngest city in Europe, where over half the population are millennials. We're leading on sustainability. We'll have 50 electric and hydrogen buses by this Christmas, nearly 200 by next Christmas, and in 2023 aiming to double that. In terms of growth opportunities for the U.K. bus business, I look at what we do well. We do well partnership working, safety, operational delivery, investment in vehicles and sustainability, and I think that model plays well in other places. We know London already franchised their buses. Manchester, Leeds, Liverpool are heading in that direction, Dublin and nearby interesting market as well. So absolutely, I think this is a great time for public transport, and I think National Express are uniquely well positioned to deliver that.

So one of the newest parts of National Express is accessible transport. And within accessible transport, one of the key markets that we're focusing on is special needs education transport. These are children that have a range of different visibilities and needs and need transporting to school every day. It's a statutory service, and councils across the U.K. have to provide it. The demand on those services is growing year on year on year. About 15% of the entire U.K. pupil population requires special needs transport. They have challenges around reliability and quality because they're faced with a fragmented market dominated by taxi providers and minibus operators. What we are able to do is provide councils with a higher-quality solution, raise the standard, raise the bar, providing that governance, the assurance, the reliability, the safety to really give these children the service that they deserve when they go to school every day.

As a young team in 2015, National Express Germany started operation of the lines RE 7 and RB 48 in North Rhine-Westphalia. Since then, we have not only won 3 new lines of the RRX franchise, our company has also grown to about 500 employees. With 14 million train kilometers per year operated and generating about EUR 200 million of turnover, we are an established player in the German market for regional rail. The addressable market for tendered regional rail operation in Germany we are targeting is around 700 million train kilometers per year. Thereof, we expect to have significant potential for future growth in the years to come.

National Express brings together a number of brands under one banner of National Express Transport Solutions. We are the newly formed division of National Express in the U.K. that look after private hire and contract coach travel. The private hire sector has an annualized turnover of around GBP 3 billion. And with over 30,000 coaches operating across the U.K., it's a very fragmented market. We have an opportunity to transform the private hire and contract sector of that market and deliver a consistent product across the U.K. Each of our brands have a relationship with the local customer audience. It's a local brand to them, and there's a loyalty to that. They've been established over many years, but it also gives the local team a banner to stand underneath that has a parent company of National Express so they get the benefits of being part of a larger global business. Those local brands deliver that relationship to the customer, combining that with the in-city coach travel and allows us to tap into both sectors from fully organized coach holidays to travel and destination hotels and attractions. There's no consistent large operator that delivers that product across the whole in the U.K., and National Express has the opportunity to move into that market space and deliver that product.

As you have just seen, we operate in a number of attractive markets and have some great opportunities ahead of us. I'd now like to show you some examples from the U.K. of the group's 5 customer propositions in practice. The first one, you will already have seen, is how National Express is reinvigorating public transport in the West Midlands. The second shows how National Express Accessible Transport, or NEAT, has successfully deployed operational transformation. And the third is how National Express Transport Solutions, or NETS, is consolidating and compounding. We acquired NEAT in 2019. Birmingham City Council were very keen for us to take over the management of the contract as the previous operator delivered a very poor service. Very quickly, we modernized the business through 3 big process and technology changes. Firstly, we implemented routing software, which digitized the previously paper-based system, which was inefficient. This reduced driver head count by around 20% as well as reducing administration costs. We launched a new online home-to-school platform for routing, dispatch and compliance, providing local authority, schools and crucially parents with assurance on safeguarding and real-time performance of the service as well as providing digital information to our drivers. And we introduced safety technologies such as speed monitoring and DriveCam. This not only improves safety but also supports driver development through enabling regular evaluation and intervention to improve performance. Whilst this all had a clear safety benefit, it also reduced the cost of insurance premiums and claims by 56% since we took over the contract. All of these measures meant that we quickly reached the milestone of 100 cancellation-free days after taking over from the previous failing operator. The level of performance is simply what we expect and demand of ourselves, but the local council were astounded by the turnaround. They are clearly happy customers as they have not only renewed but we have also won additional business both in Birmingham and with other local councils in the West Midlands. We see attractive growth opportunities for our new business. The special education needs transit market in the U.K. is worth over GBP 1 billion and has been growing at an average annual rate of 8% since 2016. Every council has a legal obligation to provide school transport to young people with special needs. With several thousand providers in the U.K., it is a highly fragmented market. We are already the second largest provider. The application of technology is providing a clear source of competitive advantage, enabling us to position ourselves as the safest and most reliable partner, which should help to drive significant organic growth in this market. Moving on to NETS, another example of our customer propositions. NETS is consolidating and compounding fragmented markets, bringing the benefits of scale and consistent service to deliver growth. In recent years, we have made a number of acquisitions, adding to our existing Kings Ferry commuter and private hire business. We now have a group of businesses providing private hire, commuter, shuttle and holidays. These now operate under one brand, NETS, where we can leverage the National Express brand and reputation to win new work in what is another highly fragmented market, offering a one-stop shop. We are now able to offer a nationwide product and service both through our own depots, including West Midlands bus and our network of trusted coach operators who deliver our coach network. This ability to use a shared infrastructure of owned and third-party coach operators' depots enables us to combine our brand reputation with a low-cost operating base to offer great value and a consistent product. At GBP 2.8 billion, this is a large but fragmented market. We currently have a small proportion, but we are already the second largest provider. Turning now to the potential combination with Stagecoach. What could this mean for our U.K. business? It will provide a platform to accelerate our growth and is a fantastic opportunity to deliver significant operational efficiencies, harnessing the best of both from the combined businesses. It will deliver clear, compelling management and overhead synergies, reduce the cost of operating our coach network through utilizing Stagecoach's depot network. It will enable best-in-class technology to be spread to improve operational performance and efficiency, engineering productivity and customer experience. It will also drive revenue growth by providing owned operating bases, enabling a faster expansion of our transport solution businesses that I've just discussed. The combination will result in us being the clear market leader in the world's fifth largest economy and all at a time when the U.K. is becoming increasingly bus-friendly with GBP 3 billion worth of investment available through the new National Bus Strategy. We will continue to work hard to enhance strong relationships with key public sector stakeholders. This is something we already have a successful track record of in the West Midlands, where we have done it for many years. We will also continue to seek to maintain our industry-leading environmental and sustainability standards. Here, we see a significant opportunity to free up cash and capital as we transition our U.K. fleet to zero-emission vehicles on an availability basis. However, with or without this potential combination, I'm really looking forward to the opportunities ahead of us in the U.K. and German business. I will now hand you over to Chris to take you through the financial outlook for the group.

Thanks, Tom. Now let's turn to the numbers. A key output of our Evolve strategy is, of course, delivering strong financial returns. In this section, I'll take you through the shape of those returns and the scale of growth that we see ahead of us. But before we look at the next 5 years, I would like to remind you of what this group has achieved in the 10 years up to 2019. Between 2009 and 2019, the group has added over GBP 1.2 billion of revenue or a compound annual growth rate of 6%. And at the same time, EBIT nearly doubled from around GBP 150 million in 2009 to almost GBP 300 million in 2019, a compound annual growth rate of 7%. And note that this has been restated to remove rail from the early years to give you a better sense of the trajectory of today's portfolio of businesses. Now this growth has come from solid organic growth across all the markets in which we operated boosted by acquisitions predominantly in North America and ALSA. Clearly, 2020 revenue was severely impacted by the travel restrictions imposed to control the pandemic. 2021, although continuing to sequentially improve, is still materially impacted over the full year, but we anticipate 2022 revenue will be back to 2019 levels. And this assumes recovery trajectory that we've observed over recent months continues and there is no prolonged widespread reimposition of the kind of mobility restrictions we've endured in 2020 and 2021. Now looking further ahead, for the 5-year period from 2022 to 2027, we are targeting a further GBP 1 billion of revenue. Or put another way, on a constant currency basis, we plan to grow revenue by as much in the next 5 years as we did in the 10 to 2019. We see good growth in all divisions but particularly in ALSA and North America. We have a strong growth pipeline with GBP 1.5 billion of real opportunities across the group, and these are contracts coming up in the next 18 months on which we expect to bid as well as acquisition opportunities which we are at least in active discussion. And as you can see on the chart, over 80% of this pipeline is in ALSA and North America. Now on the chart, I've also mapped the pipeline to our 5 customer propositions, and you can see it's reasonably well balanced across each one. Now clearly, we will not win them all. We are bound to walk away from a number. And in any case, we cannot handle that level of integration, but it is a very healthy pipeline against which to deploy capital. Prior to the pandemic, the group's operating margin averaged around 10%, and we expect it to return to that level but to take a little time to recover fully. We expect an average margin of around 9% between 2022 and 2027 as margin recovery lags revenue recovery somewhat. The near-term recovery in margins is impacted by a number of factors. Firstly, mix. For example, since 2019, we have fully mobilized German rail, and that roughly doubles its size but at rail margins which are much lower than the group's average. Also, within each of our divisions, we anticipate the faster growth to come from elements that, whilst having strong margins, are lower than the average. Importantly though, whilst these businesses might have lower-than-average profit margins, they are typically less asset-intensive. The second factor is investment to encourage customers back to traveling. For example, we have frozen or reduced U.K. bus fares. We see this as an important and worthwhile investment to encourage passengers back, and we're seeing the benefit in higher occupancy levels compared to the industry average. We've also talked before about the impact of competition in our Spanish long-haul coach business from high-speed rail and from a new competitor in the U.K. coach market. So we've made some margin investments to maintain our market-leading positions. We've discussed the potential margin impact of Spanish long-haul concession renewal many times over the last few years, and this is factored into the latter stages of the next 5 years I've outlined here. All of this is mitigated by the GBP 100 million of permanent fixed cost reductions, which we announced earlier this year and which I'll come to on the next slide. And the net of all of this means that we are confident in a return to pre-pandemic profit margins, and we are targeting profit growth of over GBP 100 million between 2022 and 2027. Now just a quick word on the GBP 100 million of cost reductions. The first bar on this slide shows you the composition of our cost base in 2019, i.e., the last full year pre-pandemic. As you can see, 75% of the group's costs are driven by payroll, fuel and third-party operators. Most of these costs are highly flexible in the event of fluctuations in revenue. But during the second half of 2020, we conducted a detailed, thorough cost reduction exercise within each division, which identified GBP 100 million of permanent cost reductions. We started to implement these towards the end of 2020, and the program is now largely complete. The savings included: one, reducing managerial and administrative roles in our divisional head offices; two, reducing customer service roles as we increased automated self-service facilities for customers to buy tickets; three, rationalizing properties, removing costs from rent and utilities; and four, fast-tracking a number of the process efficiencies you heard about earlier. Looking now at cash. This is where we expect to exceed pre-pandemic levels. We expect cash margins to improve versus pre-pandemic levels, with free cash flow conversion averaging over 80% a year over the coming years compared to an average of around 65% in the years preceding the pandemic. Now this is driven by that mix of business towards more asset-light contracts and the introduction of fleetco arrangements, enabling us to transition to zero-emission vehicles through availability arrangements. These reduce the capital burden on the group's balance sheet as well as removing the residual value and technology change risks. I will return to this point in a couple of slides' time. Now this improved cash conversion is anticipated to more than offset the movement in profit margins, resulting in a significant increase in the capital available to be deployed on our 3 capital allocation priorities. We're targeting at least GBP 1.25 billion of free cash flow to be generated between 2022 and 2027. Or put another way, at constant currency, that's as much free cash as we generated in the 10 years to 2019 delivered in half the time. Before I move on to the outlook, let me take a couple of minutes to reiterate our capital allocation model, which remains largely unchanged. We utilize the group's strong free cash flow generation to invest for growth, targeting investments that deliver 15% returns; to pay a dividend with targeted cover of at least 2x; and to maintain net debt to EBITDA in a range of 1.5 to 2x. This target range of 1.5 to 2x was revised in 2020 and represents a significantly lower levered business. Its gearing averaged 2.5x for the 10 years to 2019. Now the group is currently above our target range as the rolling 12-month EBITDA is still building back post pandemic, but we expect to glide into that target range by 2023. Now I've been asked a number of times about the capital impact of transitioning our fleet to zero emissions, and I firmly believe that transition to zero-emission vehicles does not have to come at a heavy cost to the P&L or the balance sheet. The total cost of ownership is already in favor of electric versus diesel buses, and the use of availability arrangement does not give away value compared to an outright purchase. On this table, we show you the lifetime impact in terms of discounted cash flows of a platinum-specification U.K. double-decker in 3 scenarios: a diesel we purchased outright, an EV we purchased outright, and an EV on which we utilize an availability arrangement. You can see that the diesel is the most expensive and that the EV availability arrangement is the most attractive, reflecting the fact that we pay for the buses as we use them rather than an outright purchase upfront. Now these calculations are all based on the current suite of incentives for electric and diesel public transport, and any shift to further incentivize electric will only further improve the economics. And these arrangements also transfer technology change and residual value risk to the availability provider. And finally, the substitutability aspects of these arrangements mean that there is no right-of-use asset under IFRS 16. We've recently signed the first of these arrangements in the U.K. with Zenobe and are aiming to replicate similar structures in North America and ALSA. Moving on to liquidity and financing. We had GBP 1 billion of cash and unutilized facilities available at the end of June 2021. We have no material refinancing requirement until the GBP 400 million bond in 2023. We are investment-grade rated by both Moody's, Baa2, and Fitch, BBB, who both reaffirmed their ratings recently. We have a supportive banking group, who, along with our U.S. private placement noteholders, have temporarily waived or amended certain covenants through to June 2022. Now that said, we expect to be back within pre-amended covenant levels within the next few months and for gearing to be within our targeted 1.5 to 2x range by 2023. This slide shows the financial impact of the proposed Stagecoach combination and the impact it could have on our 5-year growth trajectory. You can see that pre-pandemic, the combined business would have generated GBP 4 billion in revenue and nearly GBP 400 million in EBIT with gearing of just over 2x EBITDA. Geographically, you can see the combined business is still well balanced and diversified, with the U.K. contributing broadly 45% of revenue. PwC, our reporting accountant, has signed off on at least GBP 35 million of post-contingency cost synergies, and that excludes revenue and growth synergies. So all in all, this makes for a compelling value creation for both sets of shareholders. However, what is equally important is the impact on our investment capacity and future growth trajectory. With both lower pro forma gearing out of the box and the double-digit earnings accretion for most synergies, we will have a significant additional financial flexibility to accelerate investment in our growth pipeline. This would significantly enhance our medium-term earnings growth, and the resultant free cash flow generation potential of the combined group is really exciting. So over the last decade or so, we have invested nearly GBP 1 billion into acquisitions, some large, such as Petermann in 2012 for around $0.25 billion or WeDriveU in 2019 for around $150 million, and some small. But large or small acquisitions need careful management and disciplined integration, and we have an established approach to operating these businesses post acquisition. We almost always keep the brands but, over time, introduce the National Express brand in the background as and when helpful for credentials. We typically retain the owners and key managers with whom customers have built the relationship. And we move quickly to integrate IT, pull out functional costs, embed National Express' safety tools and processes, integrate into our insurance and procurement programs, and rationalize property portfolios. We also expand their models on our network, and WeDriveU is a clear recent example of this. So the proposed Stagecoach transaction is large, but it is contained to the U.K. and we are confident that we have the bandwidth to execute it, integrate it and deliver the benefits associated with it whilst continuing to grow our base business. So to summarize. We anticipate delivering revenue back to 2019 levels in 2022, and we are targeting a further GBP 1 billion of revenue growth by 2027, as much growth in the next 5 years as we delivered in the 10 years to 2019. And this will come from all divisions but most prominently in ALSA and North America. Operating margin is expected to average around 9% over the coming years with more than GBP 100 million of additional profit in 2027. Cash margins are expected to improve compared to pre-pandemic levels with free cash conversion averaging over 80% a year, and we are targeting generation of at least GBP 1.25 billion of free cash flow between 2022 and 2027 inclusive, and that's roughly the same as we delivered in the 10 years to 2019 in about half the time. Our capital allocation model remains unchanged with a strong free cash flow being used to invest for growth, pay dividends and pay down debt. We will be a lower levered business than pre-pandemic, targeting a net debt-to-EBITDA range of 1.5 to 2x. And we've continually said that we intend to reinstate the dividend as soon as we prudently can. And if this current trajectory holds, that could be in 2022. So overall, we are really excited about the road ahead, exciting top line growth opportunities at robust profit margins converting strongly into cash. And the proposed Stagecoach transaction would accelerate this, generating material synergy benefits and providing greater covenant headroom, enabling us to reinvest for profitable growth and delever faster. I'll now hand you back to Ignacio to wrap up.

Thanks, Chris. I hope you are as excited as I am about the potential for GBP 1 billion more revenue and over GBP 100 million more profit as well as GBP 1.25 billion of free cash generation. That is the sharp edge of the Evolve strategy. Let me summarize what we have discussed today. Our vision and purpose endure and guide what we do. We want to be the world's premier shared mobility operator with services offering leading safety, reliability and environmental standard that customers trust and value. This is grounded in our purpose to lead the modal shift from cars to public transport. We will deliver on our purpose and vision through our 5 compelling, hard-to-replicate customer propositions. These propositions are underpinned by our focused application of technology, the careful targeted investment into appropriate technology that enables the output we are driving for, and these outputs are, simply put, superior outcomes for all our stakeholders. And as Chris and I have explained, there is a strong pipeline of growth across our 5 customer propositions, particularly in North America and ALSA. The proposed Stagecoach combination will enable us to convert more of these opportunities and faster whilst remaining within our gearing targets. Finally, as I said at the start of the presentation, let me bring it all back to the investment case. Why should you invest in National Express? First, we have long-term, sustainable, structural growth opportunities from modal shift to shared mobility, and this trend is increasing. Second, as we have outlined today, we have 5 compelling, hard-to-replicate customer propositions to leverage this growth. Third, we are the best-in-class operator. We have shown today how we will drive and measure that. Fourth, we are uniquely diversified and balanced, and we'll remain so with or without the Stagecoach transaction. Fifth, we are taking environmental leadership, and today, we launched our ALSA and North American commitments to round off our group ambition. Finally, we have a track record of delivering strong financial outcomes and, as Chris outlined, we expect more of the same. Thank you all for your time today. We will now take a brief pause before opening up for questions.