Firstgroup Plc · LSE:FGP
Firstgroup — FY2022 Earnings Presentation
38 slides from Firstgroup's earnings presentation, Jun 14, 2022
Slide 1: FirstGroup Results for the 52 weeks to 26 March 2022
FirstGroup Results for the 52 weeks to 26 March 2022 Tuesday 14 June 2022
Slide 2: Agenda
Agenda 1. Overview David Martin 2. Financial review Ryan Mangold 3. Business review Graham Sutherland 4. Summary David Martin 2 14 June 2022 | Results for 52 weeks to 26 Mar 2022
Slide 3: A transformed business
A transformed business Delivered on our commitments to simplify and refocus business while releasing value to shareholders ▪ All three North American businesses sold for full strategic value ▪ Balance sheet deleveraged and de-risked, with pension position strengthened ▪ £500m returned to shareholder
Slide 4: Agenda
Agenda 1. Overview David Martin 2. Financial review Ryan Mangold 3. Business review Graham Sutherland 4. Summary David Martin 4 14 June 2022 | Results for 52 weeks to 26 Mar 2022
Slide 5: Financial review summary
Financial review summary ▪ FY 2022 continuing operations ahead of expectations ▪ Stronger First Rail performance than expected at start of year and central cost reductions ahead of plan following disposals; First Bus profit growth in line ▪ Underlying operational cash flow ahead of expectations, adj
Slide 6: Financial summary
Financial summary Adjusted profit from ongoing group and adjusted net debt were ahead of expectations FY 2022 FY 2022 FY 2022 FY 2022 change vs £m Continuing Discontinued Total FY 2021 (Continuing) Revenue 4,591.1 996.9 5,588.0 +272.3 Group attributable adjusted profit1 36.2 n/a 36.2 +16.3 Adjusted2
Slide 7: First Bus financial performance
First Bus financial performance Bus recovery continues despite the temporary setback of Omicron-related restrictions in Dec/Jan ▪ Passenger revenue +49% vs FY 2021, reflecting improving volumes £m FY 2022 FY 2021 FY 2020 and yields, partly mitigated by lower pandemic-related funding Revenue 789.9 69
Slide 8: First Rail financial performance
First Rail financial performance Ahead of initial expectations driven by open access outperformance and contractual settlements £m Revenue Adj. op Attributable ▪ Management fee-based operations recorded profit in line with fixed fee profit1 net income plus two thirds of performance fee based on perf
Slide 9: Strong momentum in our key profitability metrics
Strong momentum in our key profitability metrics Our planning focuses on underlying fees from our rail contracts to look through IFRS 16 distortions ▪ Earnings momentum in First Bus and First £m` FY 2022 FY 2021 Change Rail divisions supplemented by central cost Group adjusted attributable profit co
Slide 10: Group cash flow
Group cash flow Substantial reduction in Adjusted Net Debt reflects underlying cash generation and corporate activities ▪ Management fees for rail management fee- Rail Rail open based operations are paid as dividends £m First Bus management access and Group Total following signing of subsidiary stat
Slide 11: De-risking and future sources of value
De-risking and future sources of value Group’s proactive management of legacy assets and liabilities is ahead of plan, with encouraging progress in realising further sources of value First Bus and Group pensions First Transit earnout Accounting position 26 Mar Contributions Valuation 25 Mar ▪ Payabl
Slide 12: FY 2023 financial outlook
FY 2023 financial outlook While some uncertainty remains around the pace of recovery, current trading is in line with our expectations, with the Group expected to make significant further progress in FY 2023 ▪ Although sensitive to the broader consumer spending outlook, expect volumes to continue to
Slide 13: Financial policy framework
Financial policy framework Strong financial position and outlook underpins a balanced capital allocation policy ▪ First Bus: c.£90m per annum in net cash capex, principally transition of bus fleet to 100% zero emissions by 2035 ▪ First Rail: continues to be cash capital-light, with any capital expen
Slide 14: Agenda
Agenda 1. Overview David Martin 2. Financial review Ryan Mangold 3. Business review Graham Sutherland 4. Summary David Martin 14 14 June 2022 | Results for 52 weeks to 26 Mar 2022
Slide 15: First Bus passenger trends
First Bus passenger trends Passenger travel behaviour continues to evolve, and our ability to optimise our commercial offering in response is significantly enhanced ▪ First Bus passenger volume has reached c.76% of the equivalent 2019 period recently - School/college/university-related demand largel
Slide 16: First Bus margin trajectory
First Bus margin trajectory Although progress constrained by the pandemic and more recent inflationary environment, we have the tools to adapt and deliver our 10% margin ambitions A+B. Passenger volume/funding reset and network realignment: Key components of 10% margin delivery ̶ Some initial networ
Slide 17: Regional bus policy update
Regional bus policy update First Bus continues to be at the forefront of the industry in working with local stakeholders to secure funding for service improvements and zero emissions vehicles England (69% of First Bus mileage) Scotland (24% of First Bus mileage) Operating commercially, supported by
Slide 18: Taking First Bus forward
Taking First Bus forward ▪ Although sensitive to broader consumer spending outlook, volumes and revenues are expected to grow ▪ Ongoing passenger recovery as pandemic restrictions ease ▪ Benefits of National Bus Strategy funding to encourage modal shift and enhance towns and cities ▪ Opportunities t
Slide 19: First Rail's management fee-based operations continue to deliver
First Rail’s management fee-based operations continue to deliver Leading operator with 27% share as the industry’s evolution continues ▪ DfT continues to progress plans to award multi-year contracts to current incumbents: - 3+3yr GWR National Rail Contract (NRC) awarded today - In March 2022 DfT iss
Slide 20: First Rail: open access and additional services
First Rail: open access and additional services Actively developing non-management fee-based rail operations by leveraging our operational expertise Open access (Lumo and Hull Trains) evo-rail track-to-train Wi-Fi connectivity solution Leisure revenue recovery vs broader rail industry ▪ First soluti
Slide 21: Agenda
Agenda 1. Overview David Martin 2. Financial review Ryan Mangold 3. Business review Graham Sutherland 4. Summary David Martin 21 14 June 2022 | Results for 52 weeks to 26 Mar 2022
Slide 22: Summary
Summary We have created a focused and resilient Group, with a strong platform from which to drive value for all our stakeholders FirstGroup investment case Sources of further value realisation ▪ Leading positions in bus and rail transport in the UK ▪ First Transit earnout up to $290m ($140m carrying
Slide 23: FirstGroup Results for the 52 weeks to 26 March 2022
FirstGroup Results for the 52 weeks to 26 March 2022
Slide 24: Building on our strong sustainability foundations
Appendix: Building on our strong sustainability foundations Responsible business remains intrinsic to our operating model – and key to our future Business model highly aligned to broader long-term social objectives Selected FirstGroup credentials and ratings: ▪ Public transport is critical long-term
Slide 25: First Rail accounting
Appendix: First Rail accounting £m FY 2022 FY 2021 Change ▪ Inter-divisional eliminations: Majority of gross additional services revenue is currently secured from our Revenue from management fee-based operations 3,762.2 3,596.7 +165.5 management fee-based operations Revenue from open access and addi
Slide 26: Reconciliation to First Rail-adjusted metrics
Appendix: reconciliation to First Rail-adjusted metrics FY 2022 Movements FY 2022 Group Adjusted First Gross up tax Adjusted £m adjusted Rail earnings Actual interest earnings attributable to IFRS 16 and minority and tax interests after tax profit basis First Bus adjusted operating profit 45.2 - - -
Slide 27: Movement in net debt
Appendix: Movement in net debt Adjusted Ring-fenced IFRS 16 Statutory ▪ Disposal proceeds include £220m debt transferred £m Net Debt cash leases net debt with First Student and First Transit and £35.3m Underlying cash movements 40.3 - - 40.3 post-completion receipts for Greyhound legacy business Dis
Slide 28: Divisional adjusted operating profit
Appendix: Divisional adjusted operating profit Revenue Operating profit1 Operating margin1 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 £m First Bus 789.9 698.9 45.2 36.6 5.7% 5.2% First Rail 3,801.2 3,619.9 87.8 108.1 2.3% 3.0% Group items - - (26.3) (32.5) n/a n/a Continuing total 4,591.1 4,318
Slide 29: Divisional EBITDA
Appendix: Divisional EBITDA Revenue EBITDA1 EBITDA margin1 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 £m First Bus 789.9 698.9 104.4 100.8 13.2% 14.4% First Rail 3,801.2 3,619.9 649.9 711.1 17.1% 19.6% Group items - - (23.1) (29.1) n/a n/a Continuing total 4,591.1 4,318.8 731.2 782.8 15.9% 18.1
Slide 30: Other key profit and loss items
Appendix: Other key profit and loss items £m FY 2022 FY 2021 ▪ Group items: central costs £6.2m lower than prior year, reflecting changes implemented following North American disposals; expect to Adjusted1 deliver further c.£5m reduction in FY 2023 First Bus 45.2 36.6 First Rail 87.8 108.1 ▪ Net fin
Slide 31: Net adjusting items
Appendix: Net adjusting items £579.3m credit from net adjusting items principally reflects gains on sale of the North American businesses and the resulting uses of proceeds FY 2022 FY 2022 FY 2022 ▪ Rail termination sums reflect final ‘true-up’ of the £m pre-pandemic TPE and SWR franchises Cont. Dis
Slide 32: IFRS 16 (leases)
Appendix: IFRS 16 (leases) ▪ As at 25 September 2021, £1.4bn of leased assets were recognised as Right Of Use assets on the balance sheet. Rail track access payments, leases of <1 year, low values excluded; no retrospective restatement FY 2022 FY 2021 £m Under IAS17 IFRS 16 effect Under IFRS 16 Unde
Slide 33: Diesel hedge position as at June 2022
Appendix: Diesel hedge position as at June 2022 UK FY 2023 FY 2024 Annual ‘At risk’ volume (litres ‘m) 94m 91m % hedged 87% 53% Diesel rate ($/barrel) $79.63 $90.79 Equivalent cost per litre 37.5p 43.3p ▪ Prices include crude and refining cost but exclude delivery margins, duty, taxes and BSOG ▪ Equ
Slide 34: Net finance costs and taxation
Appendix: Net finance costs and taxation £m FY 2022 FY 2021 Bonds 22.2 55.8 Bank borrowings 14.1 15.7 CCFF (commercial paper) 0.7 2.0 Supplier financing 1.5 3.0 Senior unsecured loan notes 3.2 9.2 Lease interest 43.3 73.1 Notional interest on long-term provisions 4.9 3.8 Notional interest on pension
Slide 35: Total capital expenditure and acquisitions
Appendix: Total capital expenditure and acquisitions Fixed asset / software additions Cash £m (including acquisitions) FY 2022 FY 2021 FY 2022 FY 2021 First Student 72.6 50.6 87.7 174.0 First Transit 21.8 16.2 12.2 20.2 Greyhound 37.1 14.9 37.0 5.7 First Bus 61.1 30.1 63.2 24.0 First Rail 57.3 116.5
Slide 36: Pensions
Appendix: Pensions Surplus/(Deficit) Cash contributions P&L charge1 £m 12m to Mar 12m to Mar 12m to Mar 12m to Mar 12m to Mar 12m to Mar Mar 2022 Mar 2021 Mar 2020 2022 2021 2020 2022 2021 2020 First Bus and Group 197.5 (166.9) (94.9) 245.5 44.2 37.8 6.9 6.2 10.7 North America (10.9) (104.7) (218.5)
Slide 37: GWR National Rail Contract
Appendix: GWR National Rail Contract Terms similar to SWR and TPE National Rail Contracts ▪ Concession-style National Rail Contract; Train Operating Company (TOC) earns annual fee for service delivery with performance incentives ▪ Initial three year contractual term to June 2025, with option to exte
Slide 38: Important notice
Important notice This presentation includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including (but not limited to) the terms anticipates, believes, could, estimates, expects