Firstgroup Plc · LSE:FGP
Firstgroup — H1 2015 Earnings Presentation
39 slides from Firstgroup's earnings presentation, Nov 5, 2014
Slide 1: FirstGroup plc Half-yearly results for the six months to 30 September 2014
FirstGroup plc Half-yearly results for the six months to 30 September 2014 Wednesday 5 November 2014
Slide 2: Tim O’Toole, Chief Executive
Tim O’Toole Chief Executive 2
Slide 3: Overview
Overview • Trading for the Group in line with our expectations – Encouraging progress with First Student turnaround – Good performances in First Transit and UK Rail – Core Greyhound customers and some local UK Bus markets not seeing benefit from improving macroeconomic trends • Results more weighted
Slide 4: Financial review
Chris Surch Group Finance Director Financial review 4
Slide 5: Key highlights
Key highlights • Adjusted operating profit £103.6m up 2.4% • Adjusted EPS 1.8p up 63.6% • Net cash outflow of £91.0m (H1 2013: £103.0m outflow) – Expect full year outflow to be approx. £100m • Underlying capital investment £222m (ex-UK Rail) • Net debt to EBITDA: 2.5x due to seasonal swings (FY 2014
Slide 6: Financial summary
Financial summary Sep 2014 Sep 2013 restated1 Change Revenue £2,941.1m £3,300.7m (10.9)% Adjusted2 - EBITDA3 £253.3m £260.5m (2.8)% - Operating profit £103.6m £101.2m +2.4% - Margin % 3.5% 3.1% +0.4pp - Interest £(70.3)m £(81.6)m (13.8)% - Profit before tax £33.3m £19.6m +69.9% - Attributable profit
Slide 7: Group revenue bridge
Group revenue bridge £m Revenue Change H1 2013 3,300.7 (10.9)% UK Rail revenue support (192.7) UK Rail reduction in First ScotRail subsidy (98.2) UK Bus operations sold or closed in prior period (56.0) Foreign exchange (122.4) H1 2013 comparator 2,831.4 +3.9% Growth / other 109.7 H1 2014 2,941.1 7
Slide 8: Divisional performance
Divisional performance Revenue (£m) Operating Profit1 (£m) Operating Margin1 (%) Sep 14 Sep 13 Sep 14 Sep 132 Sep 14 Sep 132 Student 605.7 666.4 4.5 10.4 0.7% 1.6% Transit 410.2 408.7 29.5 31.4 7.2% 7.7% Greyhound 314.0 333.7 29.9 32.1 9.5% 9.6% UK Bus 449.2 490.7 16.9 15.9 3.8% 3.2% UK Rail 1,155.6
Slide 9: Non-trading items
Non-trading items Sep 14 Sep 13 £m £m Amortisation charges (25.8) (25.9) Gain on disposal of property 26.1 - Legal claims (12.2) - IT licences (8.7) - UK Bus depot sales and closures (2.4) 15.3 Ineffectiveness on financial derivatives - (17.0) Other (0.4) - Other non-GAAP adjusting items 2.4 (1.7) T
Slide 10: Net cash flow
Net cash flow £253.3m £43.9m (£268.5m) (£15.2m) (£7.5m) - (£12.4m) - (£84.6m) (£91.0m) Provisions EBITDA Pensions Interest and tax Net cash flow Working capital / other Capital expenditure Property disposal proceeds • Full year net cash outflow is expected to be approximately £100m including £70m ou
Slide 11: Financial position
Financial position • Strong liquidity and stable financing platform to drive forward transformation – Long term facilities in place – next refinancing 2019 – Average debt maturity 5.7 years (2013: 6.5 years) – Liquidity – headroom under committed facilities plus free cash: £943m (2013: £1,003m) – Mi
Slide 12: Business review
Tim O’Toole Chief Executive Business review 12
Slide 13: First Student
First Student • Successful contract portfolio pricing programme this year – Average price increases of c.4.5% on contracts up for re-bid this season (approx. one-third of bus fleet) – timing of school year means benefit will be seen in H2 – 90% contract retention – customer recognition of our overal
Slide 14: First Transit
First Transit • Outsourcing and demographic trends continue to create opportunities to grow our diverse contract portfolio, with modest capital requirements • Growth profile this year driven by timing of available opportunities and two larger contracts rolling off in H2 – Profitable contract wins co
Slide 15: Greyhound
Greyhound • Greyhound Express delivered profitable like-for-like growth of 5.8% • Core Greyhound customers not yet benefiting from improving economy • Programme underway to equip traditional Greyhound with the tools to reduce dependence on the macroeconomic cycle – Good progress with technology roll
Slide 16: US consumer sentiment by income band
US consumer sentiment by income band 105 Change over last twelve months: Top third: 11.4% up Middle third: 2.4% up 95 Bottom third: 0.6% up 85 Index value 75 65 55 45 2008 2009 2010 2011 2012 2013 2014 Bottom third Middle third Top third Source: University of Michigan Consumer Survey: Index of consu
Slide 17: UK Bus
UK Bus • Actions taken with fares, networks and local partnerships are delivering good volume growth – 2.1% LFL volume growth in H1; principally commercial passengers – Pace of economic recovery continues to vary across our local markets • 2.1% LFL revenue growth – no net price inflation across port
Slide 18: UK Rail
UK Rail • Robust revenue and passenger volume growth coupled with strong operating performance • Negotiating with DfT for First Great Western direct award to at least March 2019 • Shortlisted for TransPennine Express from February 2016; negotiating direct award up to that time • Submitted InterCity
Slide 19: Summary
Summary • Trading in the period in line with our expectations • Results more weighted to H2 than usual this year • Strong liquidity and stable financing platform to progress transformation • Focused on achieving our medium term financial targets • Confident our plans will deliver sustainable improve
Slide 20: FirstGroup plc Half-yearly results
FirstGroup plc Half-yearly results for the six months to 30 September 2014
Slide 21: Appendices
First (p Appendices © =
Slide 22: First Student
First Student Sep 14 Sep 131 Change $m $m Revenue 1,013.1 1,029.7 (1.6)% Operating profit 6.0 17.3 (65.3)% Margin % 0.6% 1.7% (1.1)pp Operating $m Revenue profit Sep 131 1,029.7 17.3 Net growth / op days / other (20.4) (16.0) Exit of loss making contracts (21.6) - Inflation 18.7 (7.0) Mgmt initiativ
Slide 23: First Transit
First Transit Sep 14 Sep 13 Change $m $m Revenue 687.7 630.8 9.0% Operating profit 49.3 48.6 1.4% Margin % 7.2% 7.7% (0.5)pp Operating $m Revenue Profit Sep 13 630.8 48.6 Net growth 64.1 2.5 CAN$ fx / Other (7.2) (1.8) Sep 14 687.7 49.3 23
Slide 24: Greyhound
Greyhound Sep 14 Sep 131 Change $m $m Revenue 527.0 514.7 2.4% Operating profit 50.3 49.6 1.4% Margin % 9.5% 9.6% (0.1)pp Operating $m Revenue profit Sep 131 514.7 49.6 Passenger revenue 18.0 18.0 Product improvement - (5.3) Increased marketing - (2.8) Inflation / other - (9.5) CAN$ fx (5.7) 0.3 Sep
Slide 25: UK Bus
UK Bus Sep 14 Sep 131 Change £m £m Revenue 449.2 490.7 (8.5)% Operating profit 16.9 15.9 6.3% Margin % 3.8% 3.2% 0.6pp Operating £m Revenue profit Sep 131 490.7 15.9 Depot closures and sales (56.0) - Sep 13 adjusted 434.7 15.9 Revenue growth 14.5 8.8 Cost inflation / other - (11.8) Cost efficiencies
Slide 26: UK Rail
UK Rail Sep 14 Sep 131 Change £m £m Revenue 1,155.6 1,395.2 (17.2)% Operating profit 40.0 25.8 55.0% Margin % 3.5% 1.8% 1.7pp 1. Restated for the reclassification of UK Rail bid costs 26
Slide 27: Financial results
Financial results Sep 14 Sep 131 Change £m £m Revenue 2,941.1 3,300.7 (10.9)% EBITDA 2 253.3 260.5 (2.8)% EBITDA % 8.6% 7.9% 0.7pp Operating Profit 3 103.6 101.2 2.4% Margin % 3.5% 3.1% 0.4pp Interest (70.3) (81.6) (13.8)% Profit before tax 3 33.3 19.6 69.9% Non-GAAP adjustments (23.4) (27.6) (15.2)
Slide 28: Capital expenditure
Capital expenditure Cash Fixed Asset Additions Sep 14 Sep 13 Sep 14 Sep 13 £m £m £m £m First Student 128.5 96.5 106.5 96.4 First Transit 15.7 8.1 15.3 8.0 Greyhound 35.8 32.6 35.8 32.6 UK Bus 41.1 35.6 63.2 61.0 UK Rail 35.2 21.1 33.5 20.4 Group items 1.2 0.8 1.2 0.8 Total 257.5 194.7 255.5 219.2 Ca
Slide 29: Pensions
Pensions Deficit Cash contribution P&L charge1 Sep Mar Sep Sep Mar Sep Sep Mar Sep £m 2014 2014 2013 2014 2014 2013 2014 2014 2013 North America (154.7) (152.4) (152.0) 14.4 20.0 21.5 3.5 6.9 3.7 UK Bus2 (129.2) (94.2) (45.3) 29.7 53.6 25.4 17.0 30.4 15.5 UK Rail (7.4) (14.1) (7.9) 22.9 48.3 28.6 31
Slide 30: Diesel hedge position
Diesel hedge position UK North America 2014/15 2015/16 2016/17 2014/15 2015/16 2016/17 Annual volume (barrels’m) 2.2 1.4 1.1 1.5 1.5 1.5 % hedged 93% 90% 34% 78% 67% 27% Crude rate ($/barrel) $101.21 $98.03 $97.30 $89.93 $87.20 $86.11 Diesel rate ($/barrel) $122.41 $117.24 $114.24 $118.63 $115.59 $1
Slide 31: Net finance costs
Net finance costs Sep 14 Sep 13 £m £m Bonds 43.0 45.6 Bank borrowings 7.9 13.3 Loan notes 0.5 0.5 Senior unsecured loan notes 2.0 2.0 Finance lease interest 5.5 7.3 Notional interest on long term provisions 7.4 10.0 Notional interest on pensions 4.8 3.6 Investment income (0.8) (0.7) Net finance cost
Slide 32: Foreign exchange
Foreign exchange • Lower US Dollar compared to March: Sep 14 Mar 14 Sep 13 Closing rate for the balance sheet US$ $1.63 $1.66 $1.61 Closing rate for the balance sheet CAN$ $1.81 $1.84 $1.66 • Higher US Dollar rate compared to last half year: Sep 14 Mar 14 Sep 13 Effective rate on US$ earnings $1.65
Slide 33: Taxation
Taxation Sep 14 Sep 13 £m £m Current tax 2.5 2.0 Deferred tax (0.1) (13.8) Tax charge/(credit) 2.4 (11.8) Tax paid 3.1 4.2 Tax rate on Adjusted profit before tax 22.0% 22.0% 33
Slide 34: UK Rail passenger revenue growth
UK Rail Passenger revenue growth Six months to: Sep 14 Mar 14 Sep 13 Mar 13 FCC 6.8% 8.1% 6.9% 6.3% FGW 7.0% 4.9% 4.6% 6.7% FSR 4.7% 5.5% 6.2% 6.6% FTPE 6.2% 5.6% 6.3% 7.8% Hull Trains 9.7% 5.2% 8.0% 9.4% Total 6.5% 6.0% 5.7% 6.7% • Continued solid demand across all of our franchises – passenger vol
Slide 35: UK Rail subsidy/(premium) profile
UK Rail subsidy/(premium) profile £m FCC FCC DA FGW FGW DA FSR FTPE Total FY 2012/13 (228.2) - (435.3) - 447.2 57.0 (159.3) HY 2013/14 (118.0) - (234.2) - 231.2 30.8 (90.2) FY 2013/14 (254.4) - (273.9) (22.0) 506.9 65.7 22.3 HY 2014/15 - (69.9) - (53.7) 133.0 24.8 34.2 • FGW and FCC franchise paymen
Slide 36: Revenue support/profit share
Revenue support/profit share Sep 14 Mar 14 Sep 13 Six months to: £m £m £m FCC Revenue Support - 20.3 39.3 FGW Revenue Support - 24.0 153.4 FTPE Profit Share - - (1.4) Total - 44.3 191.3 • FCC and FGW did not receive revenue support in the period • FSR eligible for revenue support but currently tradi
Slide 37: UK Rail bonds
UK Rail bonds Sep 14 Sep 13 £m £m FTPE Performance bond 10.6 10.6 FSR Performance bond 25.0 25.0 FSR Season ticket bond 5.4 5.2 FSR Maintenance bond 20.7 20.7 FCC Performance bond 10.0 22.6 FCC Season ticket bond 58.9 58.0 FGW Performance bond 10.0 63.4 FGW Season ticket bond 26.4 19.8 Total 167.0 2
Slide 38: UK Rail ring-fenced cash
UK Rail ring-fenced cash Sep 14 Sep 13 £m £m FCC 39.7 74.7 FGW 116.4 14.8 FSR 73.1 85.6 FTPE 46.7 43.1 Total 275.9 218.2 38
Slide 39: Disclaimer
Disclaimer Certain statements included or incorporated by reference within this presentation may constitute “forward looking statements" in respect of FirstGroup plc's operations, performance, prospects and/or financial condition. Such statements are based on our current expectations and beliefs con