Good morning, everyone, and thank you for joining us today. Before handing over to Ignacio and Chris to take you through the highlights of our return to profitable growth in 2021, I want to say a few words about yesterday's announcement of a counteroffer for Stagecoach. We continue to believe that we made a compelling offer for Stagecoach, providing both sets of shareholders with the opportunity to share in the significant value created from both the material synergies of the combination and the future upside of our industry more broadly. As you would expect, we're now considering our options. While we see the combination as an accelerator to our Evolve strategy, the implementation of that strategy is far from dependent on it.
I know there will inevitably be more questions, but I'm afraid there is not much more that we can say at this point, given the requirements of the takeover code, as you will appreciate. We are a well-diversified business, and as you will hear from Ignacio and Chris, we've taken decisive steps to position the group strongly for the future growth in the context of a sustained recovery in patronage, whilst reducing leverage and protecting against the current inflationary environment. We have a compelling vision, the right strategy, and a strong managerial team focused on delivery. With that, let me hand over to Ignacio.
Thank you, John. It is just over a year since I joined National Express, and despite it being another pandemic-affected year, I'm pleased with the underlying progress we have made. There are four key areas that I would like to highlight today, but before I do, I would like to start by thanking our more than 44,000 employees for the critical role they have played this year in helping to drive our business forward as we have continued to navigate our way through another stop-to-start year. 2022 is not without its uncertainties either, as we all look with compassion at the tragic events playing out in Ukraine. While we do not expect our day-to-day operations to be impacted, we're offering support to all colleagues with family affected and are working with humanitarian agencies to support travel for Ukrainian refugees in mainland Europe.
Turning to the four key areas. Starting with our renewed strategic focus where we have presented the Evolve strategy, which sets our course for the next five years, embeds our purpose of driving model shift, and targets an incremental GBP 1 billion of revenue, GBP 100 million of EBIT, and GBP 1.25 billion of free cash generation. Secondly, we have rebounded well, and I am delighted to say we have delivered results at the top end of expectations with profit before tax of GBP 40 million, 123 million of free cash flow, and significant deleveraging with gearing reduced to 3.66x. I also want to highlight that we continue to manage our cost well, having already taken actions to reduce fixed costs while locking in variable costs against inflation. Thirdly, we are future-proofing the business by driving a greener operating model.
We have set ambitious environmental targets for each of our divisions and signed our first availability contract with Zenobē for around 200 electric buses, reducing CapEx and mitigating technology risk. Fourthly, we're positioned for profitable growth. We are seeing customers returning to our services with passenger numbers rising for six consecutive quarters across all geographies. We have a strong pipeline of growth opportunities amounting to GBP 1.5 billion of revenue. Reflecting our confidence in the outlook, today we also announced our intention to reinstate a dividend for full- year 2022. I will now hand over to Chris, who will talk through the financials before coming back to talk about our strategy and priorities.
Thanks, Ignacio. Let me start with a summary. In a year that continued to be shaped by the pandemic, we delivered revenue of GBP 2.17 billion, up 11% or 16% on a constant currency basis. Pleasingly, despite ongoing restrictions, the group has returned to profitability, recording an underlying operating profit for the period of GBP 87 million. Now, the fact that a GBP 214 million increase in revenue flowed through to a GBP 138 million improvement in profit reflects the benefits of the GBP 100 million cost reduction program announced last year, as well as improving occupancy levels across the group. The 61% increase in EBITDA to GBP 300 million drove free cash flow of GBP 123 million, a year-on-year improvement of GBP 319 million.
At a statutory level, however, after separately disclosed items that I will cover in a minute, the group posted a loss before tax for the year of GBP 85 million. Whilst we look forward to returning to statutory profit this year, our performance in 2021 already represents a year-on-year improvement of GBP 360 million. This chart shows how we have steadily rebuilt revenue since the start of the pandemic. As you can see from the graph on the left, revenue has improved sequentially each quarter, finishing 2021 with fourth quarter revenue just 9% below that delivered in Q4 2019. The second chart shows how that revenue recovery has translated to EBITDA.
As you can see, the group has not only delivered sequential EBITDA growth quarter- on- quarter, but has accelerated the rate of growth, with growth in the second half of 76% relative to 45% growth in the first half. Now, let me turn to the separately disclosed items. We separately disclosed GBP 125 million of costs in the year, of which GBP 44 million flowed as cash. GBP 41 million of the separately disclosed items and GBP 32 million of the cash outflow was directly driven with dealing with the pandemic. There are three main drivers of this. Firstly, an additional GBP 10 million of onerous contract provisions were recognized. A large proportion of this arose in the U.K., principally the revision of previously recognized provisions for the Luton Airport contract and a net school bus contract.
Second, a further GBP 17 million of non-cash impairments were recorded for assets associated with other contracts that have been terminated following the completion of the portfolio review started in 2020. Lastly, the reassessment of the WeDriveU put option liability resulted in a net increase of GBP 11.5 million, reflecting both improved profitability for 2021 and improved forecast profitability for 2022. Now, this partially offsets for the reduction we made last year. Going forward, we do not expect any further COVID related exceptional costs to be recorded. In addition to the COVID driven costs, there are two more material charges. Firstly, GBP 12 million of restructuring costs were incurred to drive permanent structural cost reduction, and that will benefit us in full from 2021 onwards.
Second, a further GBP 28 million has been recorded against the onerous contract provision set up for the German Rail RRX contract last year. This reflects new information in the year, including the significant increase in energy prices. Now, we expect to be able to mitigate some of this over the life of the contract, but have based the provision in line with accounting standards on factors fully within our control today. The overall outlook for German Rail remains positive with the recent emergency award and resolution of subsidy and penalty claims improving our confidence in the outlook for the business. With that, I'll now turn to performance by division. ALSA revenue increased by 33%, resulting in a EUR 59 million increase in operating profit to EUR 66 million.
The urban bus businesses in Spain as well as in Casablanca are largely revenue protected, and that provides a stable underpin to performance while patronage is rebuilt. Long haul has recovered well, with revenues in the second half of the year improving to within 20% of pre-pandemic levels despite ongoing restrictions. In Morocco, revenues grew by 36% to EUR 134 million, driven by Rabat and Casablanca, but with other cities also recovering strongly. North America revenue increased by 7%, resulting in an increase in operating profit of $86 million to $102 million.
Despite schools being broadly fully open, the second half of the year for school bus has been impacted by driver shortages, which has driven a number of lost routes, and we expect to continue to be impacted by driver shortages for the balance of this school year. Transit continues to benefit from the 2020 portfolio review, as well as some key contract extensions, and revenue peaked at nearly 80% of 2019 levels. Shuttle customers mostly continued to pay in full, such that WeDriveU continues to deliver close to pre-pandemic levels of profit. In the U.K., revenue increased by 3%, resulting in an increase in profit of GBP 26 million, although still producing an operating loss of GBP 23 million. U.K. bus patronage grew sequentially and peaked at 80% pre-pandemic levels before dropping off a little again as restrictions were reapplied.
Coach revenue finished the year 48% down on 2019, having peaked at 36% down. The continued mobility restrictions with no revenue support available while services were rebuilt drove an operating loss to offset the small profit made in bus. Now, let me say a few words about cost control. Over the last two years, we have taken decisive action to reduce fixed costs and to lock variable costs against inflation. Now, the easiest way to see the impact of this is the fact that despite variable cost increases to support the 11% revenue growth and the impact of inflation, the increase in operating costs was contained at 3.8%.
That is reflective of the cost- saving programs implemented in late 2020 and early 2021 to remove 100 million of costs from the group, as well as the rebuilding of occupancy levels to improve operating leverage. We've also taken appropriate steps to shield the group from current high levels of cost inflation. As I said, locking variable cost rates. Fuel represents approximately 8% of our total cash costs. Based on current projections, the group is fully hedged for 2022 at an average price of GBP 0.34 per liter versus GBP 0.378 per liter we paid in 2021. We're hedged around 65% for 2023 and 25% for 2024 at average prices below 2021 levels. In October, we fixed all our U.K. energy costs for three years.
The most significant other input costs, vehicles and parts, are all subject to long-term supply agreements with indexation locked between 1.5% and 3.9%. Wages are the biggest component of our cost base, accounting for more than 60% of cash costs. We have collective bargaining agreements in place with wage increases ranging between 2% and 4%, and less than 20% of those CBAs are due for renegotiation in 2022. Now, we are experiencing faster wage growth in our U.S. school bus business, where it's running at around 5.4%. But the early signs from this year's bid season suggest we should be able to recoup that through customer price increases. I will return to financing arrangements a little later, but given the structure of our facilities, we have very limited exposure to short or medium-term interest rate increases.
I'll now turn to cash flow. As I said earlier, the group generated EBITDA of GBP 300 million in 2021. Maintenance CapEx expenditure of GBP 142 million versus GBP 216 million in 2020 reflects the actions taken in 2020 to reduce capital additions in response to the pandemic. The group recorded a working capital inflow of GBP 33 million for the year, reflecting strong cash collection as well as the impact of recovering activity levels. Net interest paid decreased by GBP 15 million to GBP 41 million. As well as being a factor of lower average net debt in 2021, in 2020, we paid the final interest payment on a maturing bond, while at the same time making payments on new borrowings. The reduction in interest paid was partially offset by higher cash tax, given the improved results.
The net impact of all of this was a free cash inflow of GBP 123 million, comprising of an inflow of GBP 41 million in the first half and GBP 82 million in the second half. Growth capital expenditure of GBP 134 million principally comprised vehicles to service new contracts in ALSA and North America. The year-on-year increase reflected payments in respect of the Rabat and Casablanca fleets, which had been delivered in the prior year. The GBP 54 million outflow for acquisitions includes GBP 23 million for the acquisition of Rober in Spain and GBP 18 million for the purchase of a further 10% of WeDriveU upon the exercise of put options by the vendor. The remainder is deferred consideration in respect of previous year's acquisitions. The exceptional items I covered earlier drove a cash outflow of GBP 44 million.
The other inflows of GBP 60 million you see here principally reflect the strengthening in the pound, which reduces the value of debt denominated in foreign currency. The result of all of this is net funds outflow for the period of GBP 50 million, resulting in reported net debt of just over GBP 1 billion. Now, net debt for covenant purposes, the main difference being the exclusion of IFRS 16 lease liabilities, was GBP 867 million, resulting in gearing of 3.6x EBITDA. That is significantly reduced from 6.6x in 2020 and almost back within our pre-amendment thresholds. Now, as I've said before, I firmly believe that the transition to zero-emission vehicles does not have to strain 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 contracts 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 three scenarios: a diesel we purchase outright, an EV we purchase outright, and an EV we utilize through an availability arrangement. The second chart shows the undiscounted inputs, i.e., the higher EV purchase price offset by the reduced EV operating costs. You can see that 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 as an outright purchase upfront.
As I've said before, these arrangements also lock in technology change and residual value risk to the availability provider. We've recently signed the first of these arrangements in the U.K. with Zenobē and are working to put in place similar structures in North America and ALSA. We know customers and passengers love EVs. They are quieter, smoother, and just nicer places to be. Getting the economics right to drive faster transition will reduce pollution, reduce costs, and drive profitable growth. During the first half of 2021, we allowed the short-term facilities that were put in place at the start of the pandemic to lapse and did not refinance them, given our ample liquidity headroom. At December 31, 2021, the group had GBP 1.9 billion of net debt and committed facilities with an average maturity of 4.7 years.
Now, there is clearly a lot of volatility in debt capital markets at the moment, both in terms of interest rate expectations and gilt yields. Over 80% of our facilities are fixed or 100% on a net basis, accounting for cash on deposit. We have minimal exposure to rate rises in the medium term. We have no material refinancing requirements before the GBP 400 million bond in November 2023, and based on current market conditions, the refinancing of that bond is expected to increase coupon payments by only around GBP 2 million. Before closing with guidance, I wanted to take a minute to reiterate our capital allocation model, which remains unchanged.
We will use the group's strong free cash flow generation to invest for growth, targeting 15% returns, to pay a dividend with targeted cover of at least 2x, and to maintain gearing in a range of 1.5x-2x. Our first priority is to get gearing back comfortably within that pre-amendment covenant limit of 3.5x. We expect to close this year at around 2.5x geared. Let me finish with what all of that means for 2022 and for the longer term. Now, I'm somewhat limited in what I can say, but let me remind you of what we've already said at the recent Capital Markets Day. We anticipate delivering revenue back to 2019 levels in 2022.
Before accounting for the synergies from the proposed transaction, we are targeting a further GBP 1 billion of revenue growth by 2027. Operating margin is expected to average around 9% over the five years between 2022 and 2027, with more than GBP 100 million of additional profit in 2027. In the short term, margins will lag this average as we invest to rebuild patronage before they recover to pre-pandemic levels of 10%+ in the latter years of that range. 2022 free cash flow conversion is expected to be around the pre-pandemic level of 60% before improving to an average of 80% over the period between 2022 and 2027.
We've consistently said that we intend to reinstate the dividend as soon as we prudently can, and if the current trajectory holds, we intend to pay a dividend in respect of the full year 2022 results at least two times covered. We anticipate paying the entire 2022 dividend based on the full- year results, reverting to a split between interim and final dividends for subsequent years. In summary, we are really pleased with our 2021 performance and our prospects remain strong. I will hand you back to Ignacio to give more color on that.
Thank you, Chris. Let me return to our strategic progress. First, I would like to share with you a few of the operational highlights from 2021. As the recovery from the pandemic has undoubtedly been a major focus in the year, I'm also proud of the significant progress made right across the group to position us for growth and to drive our strategic priorities. In ALSA, our transformation plan is delivering significant cost savings. We are continuing to win new contracts through M&A and bidding. We have seen significant passenger growth in Morocco, and we are mobilizing our first contract in Portugal. In North America, we have had our best- ever year for safety, service, and customer satisfaction. We're embedding significant operational improvements through our Driving Excellence program, and our transit portfolio review is delivering improved operational and financial results.
In the U.K., we have also achieved strong safety results, having been awarded with five-star ratings yet again from the British Safety Council. We have redesigned and rebuilt our coach networks. As I mentioned in my opening remarks, we are making progress on zero-emission vehicles with an industry-leading availability model. In Germany, our growing reputation resulted in the award of an emergency contract. We set out our Evolve strategy in detail in our Capital Markets Day presentation last October. We're guided by our vision to be the world's premier shared mobility operator and our purpose to lead modal shift from car to mass transit. We have five clear customer propositions underpinned by technology across which we have a pipeline of GBP 1.5 billion of analyzed revenue opportunities. We are clear on the outcomes we want to achieve to be the best-in-class operator with strong financial results.
We have a crucial role to play in mitigating climate change. Governments are now accelerating action in response to the climate crisis and deploying policies that support this. If governments are to meet their COP26 commitments, and if we are to contain global temperature rises, modal shift from cars to public transport is absolutely essential. Over the years, you will have heard us as a group talking about the modal shift opportunity, but it's now clearer than ever that it is a necessity. The U.K.'s Climate Change Committee estimate that 9%-12% of car journeys could be switched to bus by 2030, and 17%-24% by 2050. A shift of just 1% from cars to buses could increase passengers by 23%. You can see that the benefits of modal shift are potentially huge.
By facilitating modal shift out of cars into public transport and decarbonizing our own fleet at the same time, we have a multiplier effect on the reduction in emissions. Accordingly, reducing emissions is embedded within our Evolve strategy and in senior management's incentives. Not only do we have a crucial role to play in mitigating climate change, we also have a key part to play in social mobility by providing access to clean, affordable, safe, and reliable mobility. This was never more obvious to me than when I visited our operations in Morocco, and I'll talk more about this in a minute. The annual cost for an individual using a bus is around 20% of the cost of running a car. We facilitate access to work and education. 44% of bus trips are for those purposes. It is safer.
In the United States, the 26 million students that rely on the school bus are 70 times more likely to arrive safely than if they travel by car. As you can see, we are part of the solution to many of the most pressing problems facing the world today, climate change, air pollution, congestion, inequality, leveling up. We're making good progress in every division in embedding the Evolve strategy. I would like to give you a few examples. In Casablanca, where we are reinvigorating the public transport in the city, the new services line we have brought in have had a truly transformational impact on the area and the lives of those living there, who are now able to access employment and education as a result of our services. We are carrying over 70 million passengers a year now, nearly double that in 2020.
We are doing this more safely too, with a 48% reduction in at-fault road accident year-on-year. Our success in German Rail mobilization is serving to strengthen our relationship with the passenger transport authorities and building our reputation for reliability. So much so that we have been awarded new contract through the largest ever emergency award in German Rail, with both services already successfully mobilized in record time. In our drive to be the safest, I'm particularly proud of the safety improvements in North America with our best- ever safety performance in 2021. We have had no at-fault major injuries in the year, something which is unparalleled in a transport company of our scale and made significant improvement in driver behaviors, with speeding, one such example. Here we have seen a 42% improvement in performance.
Turning to zero- emissions vehicles transition in the U.K., Birmingham became the first city in England outside of London to start operating hydrogen buses. In another groundbreaking move, we signed our first availability contract with Zenobē for over 200 electric buses, and we will look to replicate this model further in the coming year. Of course, we have to have leading-edge digital solutions, not only to drive operational efficiencies, but to make travel as easy as possible for our passengers who want and expect a customer experience as good as their last interaction online. A great example is our Mobi4U, which is the first mobility-as-a-service app for a private operator in Spain and Morocco. This gives customers real-time information on service durations, times and intermodal connections. It is already in 11 areas of Spain and one in Morocco with further rollouts planned.
There are very encouraging signs of recovery, and whilst we expect things are going to be different from the past, we're feeling optimistic about the future. Whilst we expect some increase in flexible working patterns, we are most definitely seeing workers returning to offices. In our shuttle business, which is a part of a group that is most reliant on commuting, we are seeing our customers continue to grow their office footprints and they're also emphasizing the importance of offices for collaboration and innovation. An increase in more flexible working patterns also brings opportunities for us as it can increase the number of services that our customers want us to offer over and above just a typical morning and evening commute. We are also seeing a return to travel.
Airlines such as Ryanair and easyJet are signaling a strong bounce back in terms of capacity, and we have the contracts in place to access these airports, which should bring back profitable growth to UK Coach. We are seeing a return to public transport. As governments around the world respond to the climate crisis, we expect the private car to be disincentivized in order to reduce emissions and air pollution with more clean air and low emission zones being introduced in our towns and cities. Let me remind you of that modal shift statistic again. One person shift from cars to buses could increase passengers by 23%. Before I finish, I want to give you the very latest update on trading.
On this slide, you can clearly see how Omicron and the imposition of mobility restrictions hampered the recovery in passenger numbers in December 2021 and January 2022, but has rebounded strongly in recent weeks. I'm delighted to see that passengers are coming back to our services, and we expect a continued recovery over the course of the year ahead. To wrap up, coming back to the four key areas I talked about at the start of the presentation, we have a renewed strategic focus with the launch and execution of our Evolve strategy with strong momentum. We are pleased with improving financial results, with profits at the top end of the expectations and significant deleveraging. As both Chris and I have said, we continue to maintain a strong focus on cost control.
We have already taken action to reduce our fixed cost and also locking in variable costs to mitigate against rising inflation. We are putting in place a greener operating model with ambitious targets in every part of our business for transitioning to zero- emission vehicles. We are positioned for growth. It is great to see that patronage is recovering, and we have a strong pipeline of opportunities across our geographies and our five customer propositions.