FirstGroup plc · LSE:FGP
FirstGroup — Merger or Acquisition (March 2017)
12 slides from FirstGroup's merger presentation, Mar 27, 2017
Slide 1: South Western Rail franchise award
FirstGroup plc South Western Rail franchise award Monday 27 March 2017 27 March 2017 FirstGroup South Western rail franchise award
Slide 2: Overview
Overview ▪ Delighted to be selected by the Department for Transport (DfT) to operate the South Western franchise for at least seven years from 20 August 2017 ▪ £1.2bn will be invested to raise the quality of every aspect of train journeys on the South Western network, through state of the art trains
Slide 3: The South Western franchise today
The South Western franchise today ▪ Critical part of the national rail infrastructure − Services from London Waterloo to destinations throughout south-west London and counties in southern England − Key termini include Portsmouth, Weymouth, Exeter, Bristol, Reading. Also includes the Isle of Wight Is
Slide 4: Delivering for passengers
Delivering for passengers ▪ State of the art trains − 750 new, spacious train carriages for the Windsor, Reading and London Suburban routes by December 2020 − 18 additional, fully refurbished trains (90 carriages) on the London-Portsmouth route from December 2018 − 52,000 more peak seats per day at
Slide 5: Delivering for passengers
Delivering for passengers ▪ Easier tickets and fares − Introduce simpler fares with mobile and smart ticketing, including flexible season tickets and new lower fares for 16-18 year olds − Introduction of an easy-to-use ‘delay repay’ scheme for the first time on the network − New passenger app will b
Slide 6: Franchise process
Franchise process ▪ JV with MTR, operator of Hong Kong's highly-regarded mass transit system and with experience of operating London Overground and TfL Rail on behalf of Transport for London − Franchise Train Operating Company is owned 70:30 by FirstGroup and MTR respectively − All costs, risks and
Slide 7: Key franchise terms
Key franchise terms ▪ Operates from 20 August 2017 for seven years, with an extension option of up to 11 months at DfT discretion ▪ Robust exogenous risk mitigation mechanisms: − GDP protection – variable revenue support/sharing to extent that UK Gross Domestic Product deviates (beyond a 'nil band')
Slide 8: Franchise financial commitments
Franchise financial commitments ▪ Loan facilities provided by JV shareholders to support working capital and capital investment: − Minimum agreed funding commitment of up to £30m – shareholder loan − £88m subordinated contingent loan facilities, of which 50% bonded ▪ £15m performance bond ▪ Cash rec
Slide 9: Financial returns
Financial returns ▪ Expecting to achieve margins comparable with the recent overall industry average ▪ Operating cash flow after capital expenditure is expected to be slightly positive in Year 1 and thereafter cash flow should largely reflect share of operating profit, subject to timing of capital e
Slide 10: Expected franchise timeline
Expected franchise timeline 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Franchise start (August 2017) Waterloo modernisation Class 442 trains introduced – refurbished to 'as new' New timetable: faster
Slide 11: Next steps
Next steps ▪ Customary 'standstill period' of ten days before award formally confirmed and contracts signed ▪ Competition and Markets Authority required by law to carry out a 'phase one review', as with other UK rail franchise awards ▪ Experienced team from across FirstGroup and MTR working on mobil
Slide 12: 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