FirstGroup plc · LSE:FGP
FirstGroup — H1 2010 Earnings Presentation
38 slides from FirstGroup's earnings presentation, Nov 3, 2010
Slide 1: FirstGroup plc Half yearly results
FirstGroup plc Half yearly results for six months to 30 September p 2010 Wednesday 3 November 2010 1
Slide 2: Tim O'Toole, Chief Executive
Tim O’Toole Chief Executive 2
Slide 3: Overview
Overview • Steady progress in challenging economic environment – delivering performance in line with expectations • Return to earnings growth and strong cash performance • Adjusted Adj t d b basic i EPS up 16 16.7% 7% tto 10 10.5p 5 • Net cash generation target for full year increased from £150m to
Slide 4: Jeff Carr, Finance Director: Financial Review
Jeff Carr Finance Director Fi Financial i l Review R i 4
Slide 5: Financial results
Financial results Continuing g operations p Sepp 10 Sepp 09 Change g £m £m Revenue 3,075.8 2,958.2 4.0% EBITDA 331.8 317.1 4.6% EBITDA % 10.8% 10.7% 0.1pp Operating Profit1 170.6 164.8 3.5% Margin % 5.5% 5.6% (0.1)pp Interest (92.9) (96.8) 4.0% P fit before Profit b f t 1 tax 77 7 77.7 68 0 68.0 14
Slide 6: Financial results
Financial results Continuing operations Sep 10 Sep 09 Change £ £m £ £m Profit before tax1 77.7 68.0 14.3% Amortisation charges (17.7) (17.1) Non recurring items Non-recurring 22 0 22.0 (22 3) (22.3) Profit before tax 82.0 28.6 186.7% Tax (19.1) (2.9) Profit after tax 62 9 62.9 25 7 144.7% 25.7 144 7
Slide 7: Operating profit by division
Operating profit by division £4.6m £(0.7)m £(3.6)m £11.7m £170.6m UK Rail £164.8m £(10.5)m UK Bus Group £4.3m Greyhound First First Student Transit H1 H1 2009 2010 7
Slide 8: First Student
First Student Sep 10 Sep 09 Change $ $m $ $m Revenue 1,074.6 1,084.4 (0.9)% EBITDA 157.3 168.2 ( ) (6.5)% EBITDA % 14.6% 15.5% (0.9)pp Operating Profit 40.0 55.5 (27.9)% Margin % 3.7% 5.1% (1.4)pp • Revenue slightly reduced due to: – Budget pressures resulting in some route consolidations – Charter
Slide 9: First Transit
First Transit Sep 10 Sep 09 Change $ $m $ $m Revenue 596.5 565.5 5.5% EBITDA 46.9 40.7 15.2% EBITDA % 7.9% 7.2% 0.7pp Operating Profit 39.6 33.6 17.9% Margin % 6.6% 5.9% 0.7pp • Revenue growth of 5.5% driven by: – Shuttle up 24.6% – Paratransit up 6.0% – Fixed route up 1.5% 1 5% • Good margin develo
Slide 10: Greyhound
Greyhound Sep 10 Sep 09 Change $ $m $ $m Revenue 513.0 493.5 4.0% EBITDA 61.5 46.3 32.8% EBITDA % 12.0% 9.4% 2.6pp Operating Profit 39.2 23.5 66.8% Margin % 7.6% 4.8% 2.8pp • Like-for-like Like for like passenger revenue growth of 1.9% • US – improved margins supported by lower fuel costs and reduce
Slide 11: UK Bus
UK Bus Sep 10 Sep 09 Change £ £m £ £m Revenue 570.5 585.6 (2.6)% EBITDA 91.5 88.5 3.4% EBITDA % 16.0% 15.1% 0.9pp Operating Profit 55.4 50.8 9.1% Margin % 9.7% 8.7% 1.0pp • Overall mileage reduced by cc. 6% versus prior year • Stable performance with like-for-like passenger revenues up by 1.3% • Tar
Slide 12: UK Rail
UK Rail Sep 10 Sep 091 Change £m £m Revenue 1,053.1 1,004.7 4.8% EBITDA 74.9 72.2 3.7% EBITDA % 7.1% 7.2% (0.1)pp Operating Profit 48.4 49.1 (1.4)% Margin % 4.6% 4.9% (0.3)pp • Strong g operating p g margin g p performance despite p franchise premium increases (principally at FGW) supported by manag
Slide 13: UK Rail Passenger revenue growth
UK Rail P Passenger th1 revenue growth Six months to: Sep p 10 Mar 10 Sep p 09 Mar 09 FCC 2.8% 2.6% 2.7% 7.2% FGW 5.4% 2.5% (0.1)% 3.9% FSR 3.5% 2.8% 3.7% 7.3% FTPE 5.7% 5.7% 5.4% 9.4% H ll T Hull Trains i 7 7% 7.7% (3 1)% (3.1)% (5 9)% (5.9)% 8 7% 8.7% Total 4.4% 2.8% 1.7% 5.9% • Strong volume grow
Slide 14: Cash flow improvements
Cash flow improvements H1 2009 H1 2010 Net cash Net cash GBRf Disposal Working £(15 7) £(15.7)m Capital £24.3m Pensions/ Provisions £(93.4)m Net Capex Operating £(17.0)m Cash Flow Int, Tax & £88.6m Dividends £(43.6)m ( ) £(35.8)m £61.2m Full F ll year cash h target t t increased i d from f £150m £15
Slide 15: Cash flow
Cash flow Sep 10 Sep 09 Change £ £m £ £m £ £m EBITDA (including discontinued operations) 332.2 319.4 12.8 Non-recurring items 22.3 (25.1) 47.4 Other non-cash income statement items 4.1 3.1 1.0 Operating cash flows 358.6 297.4 61.2 Working capital outflow (16.4) (105.0) 88.6 Pension payments > income
Slide 16: Leverage
Leverage Sep 10 Mar 10 Sep 09 Mar 09 Average debt maturity (years) 5.6 6.3 6.4 4.6 Net debt:EBITDA 2.8x 3.0x 3.0x 3.2x • Committed facilityy headroom £934m at 30 Sep p 2010 • Expect to complete refinancing of bank revolver facilities by March 2011 • On track to achieve 2.5x net debt:EBITDA ratio by
Slide 17: Tim O'Toole, Chief Executive: Business Review
Tim O’Toole Chief Executive Business Review 17
Slide 18: First Student
First Student • Some route consolidations and reduced level of charter activity as school boards continue to manage budgetary constraints • Prioritising actions to reduce cost base and leverage our scale to deliver efficiencies including FOCUS – on track for roll out for start of 2011/12 school year
Slide 19: First Transit
First Transit • Continued strong revenue growth including: – New conversion contract in San Diego, California – Expansion of contract in Fort McMurray, Canada • Leveraging existing business relationships to win a number of new contracts across different market k t segments t including: i l di – New
Slide 20: Greyhound
Greyhound • Delivering growth and margin improvement in a tough trading environment • Highly cash generative • Progress P iin modernising d i i G Greyhound h d – improving i i performance and reducing cost of sale including: – Network transformation p project j –pproperties p right-sized g and moved
Slide 21: UK Bus
UK Bus • Steady performance • Targeted mileage reductions protect revenue per mile in current environment – capacity to increase networks as UK economy recovers • Focus on initiatives to stimulate revenue growth and promote modal shift – strong p g emphasis p on p partnerships p • London – improved
Slide 22: UK Rail
UK Rail • Strong revenue performance from increased volumes across all our TOCs • Encouraging growth of First Class ticket sales particularly Advance purchase and increase in fully flexible Standard ticket sales • Continued focus on operational p p performance – PPM MAA over 91% at FGW, FSR and FTPE
Slide 23: Outlook
Outlook • On track to deliver moderate earnings growth for the full year • Encouraging growth trends in some markets – particularly UK Rail and First Transit • Continue to focus on improving net cash generation – increased target g from £ £150m to ££180m ((excluding g business disposal proceeds) • D
Slide 24: FirstGroup plc Half yearly results
FirstGroup plc Half yearly results for six months to 30 September p 2010 Wednesday 3 November 2010 24
Slide 25: Appendices
A Appendices di Half yearly results for the six months to 30 September 2010 25
Slide 26: Crude oil hedge position
Crude oil hedge position UK North America* 2009/10 2010/11 2011/12 2009/10 2010/11 2011/12 Usage (barrels’m) (barrels m) 2.6 2.5 2.6 1.9 1.7 1.7 % Hedged 100% 90% 64% 100% 90% 55% Hedge rate $110 64 $110.64 $76 23 $76.23 $84 49 $84.49 $115 92 $115.92 $89 40 $89.40 $95 16 $95.16 * North America compr
Slide 27: Gross debt distribution
Gross debt distribution Main debt instruments: - $1,500m unsecured acquisition revolver facility February 2012 - £505m £505 unsecuredd revolver l facility f ilit F b February 2012 - $733m unsecured bilateral term loans October 2010- May 2013 - Unsecured bond £300m 6.875% April 2013 - Unsecured bond
Slide 28: Foreign exchange
Foreign exchange • Weaker US$ reduced translated Sterling debt compared to March 10 Sep 10 Mar 10 Sep 09 Closing rate for the balance sheet US$ $1.58 $1.49 $1.60 Closing rate for the balance sheet CAN$ $1.62 $1.53 $1.77 • The movement in the effective rate results in an increased operating profit Se
Slide 29: Non-recurring items & amortisation
Non-recurring items & amortisation ti ti Sep 10 Sep 09 Credit/(charge) C di /( h ) £ £m £ £m North American & Greyhound integration costs - (7.0) Fuel hedge provision - (4.8) North American & Greyhound restructuring cost - (5.8) UK Bus & UK Rail restructuringg costs - ((3.7)) UK Rail claim 22.5 - Ot
Slide 30: Cash capital expenditure
Cash capital expenditure S 10 Sep S 09 Sep £m £m First Student 55.7 31.2 Fi t Transit First T it 34 3.4 42 4.2 Greyhound 16.3 27.3 UK Bus 54.8 20.0 UK Rail 16.7 18.8 Group items 0.3 2.1 Total 147.2 103.6 Cash purchases 142.1 93.1 Disposal p p proceeds ((13.4)) ((21.5)) New finance leases 18.5 32.0 1
Slide 31: Tax
Tax Sep 10 Sep 09 £m £m Current tax 14.8 1.7 Deferred tax 4.3 1.2 Tax charge on continuing operations 19.1 2.9 Tax rate on adjusted profit before tax 25.0% 24.4% Expected cash tax rate 9.0% 1.0% Estimated FY 2010/11 tax rate of 25.0% 31
Slide 32: Pensions
Pensions £m Deficit D fi it att 31 M March h 2010 (331) Discount rate reduction (5.6% to 5.05%) (191) Inflation rate reduction (3.4% to 3.0%) 94 RPI to CPI change 70 Other 8 D fi it att 30 S Deficit September t b 2010 (350) • Basis for future LGPS/RPS pension increases now expected to be CPI (from R
Slide 33: UK Rail Subsidy/(premium) profile
UK Rail S b id /( Subsidy/(premium) i ) profile fil Full year: £ £m FCC FGW FSR FTPE GBRf T t l Total 2008/09 (53.4) 9.7 306.9 119.1 1.5 383.8 2009/10 (145.3) (140.7) 249.2 115.8 2.8 81.8 2010/11 (157.4) (246.2) 268.6 120.7 0.4 (13.9) • 2008/09 FCC premium payment reduced due to agreed Thameslink ti
Slide 34: UK Rail Revenue support/(profit) share
UK Rail R Revenue support/(profit) t/( fit) share h FY Estimate Sep 10 Mar 10 Sep 09 10/11 £m £m £m FCC Revenue Support pp 80% 20.1 39.7 14.8 FGW Revenue Support 80% 73.3 133.1 61.6 FTPE Profit Share 52% (5.4) (16.3) (5.4) Total 88.0 156.5 71.0 • Revenue support available in FSR – currently trading
Slide 35: UK Rail bonds
UK Rail bonds Sep p 10 Sep p 09 £m £m FTPE Performance bond 8.8 8.5 GBRf MetroNet bond - 0.8 FSR Performance bond 25.0 25.0 FSR Season ticket bond 4.0 3.9 FSR Maintenance bond 23 9 23.9 28 6 28.6 FCC Performance bond 22.5 21.2 FCC Season ticket bond 44.0 43.7 FGW Performance bond 46.2 45.2 FGW Seaso
Slide 36: UK Rail Ring-fenced cash
UK Rail Ri Ring-fenced f d cash h S 10 Sep S 09 Sep £m £m FCC 61.5 45.8 FGW 65.9 46.8 FSR 27.9 24.5 FTPE 64.0 58.7 Total 219.3 175.8 36
Slide 37: UK Rail franchise contracts
UK Rail franchise contracts FCC FGW FSR FTPE Years 4+2+3 7+3 10 8+5 Start date Apr 2006 Apr 2006 Oct 2004 Feb 2004 Expiry p y date Mar 2012 Mar 2013 Nov 2014 Jan 2012 Performance related Mar 2016 extension period Authority extension Up to Mar Jan 2017 period (at discretion 2015 of the DfT) 37
Slide 38: Disclaimer
Disclaimer Certain statements included or incorporated by reference within this presentation may constitute “forward lookingg statements" in respect p of FirstGroup ppplc's operations, p ,pperformance,, p prospects p and/or financial condition. Such statements are based on FirstGroup plc's current e