Firstgroup Plc · LSE:FGP
Firstgroup — Berenberg UK Corporate Conference (March 2023)
40 slides from Firstgroup's conference presentation, March 2023
Slide 1: Berenberg Conference Presentation
Berenberg Conference Presentation March 2022
Slide 2: Overview
Overview First
Slide 3: First Rail - the UK's largest rail operator
First Rail - the UK’s largest rail operator ▪ c.£11bn addressable UK passenger operator revenue in 2019-2020 ▪ There are 23 Train Operating Companies (TOCs) in the UK and 3 open access operations ▪ First Rail operates four TOCs contracted by Government, as well as the Lumo and Hull Trains open acces
Slide 4: First Bus – the UK's second largest regional bus operator
First Bus – the UK’s second largest regional bus operator ▪ First Bus operates around a fifth of local bus services outside London, and serves two-thirds of the UK’s 15 largest conurbations as well as a number of Business to Business (‘B2B’) services across the UK ▪ A leader in digital transformatio
Slide 5: Building on our sustainability foundations
Building on our sustainability foundations Responsible business remains intrinsic to our operating model – and key to our future Business model highly aligned to long-term environmental and social objectives Selected FirstGroup credentials and ratings: ▪ Public transport is critical long-term infras
Slide 6: Financial performance
Financial performance 6 9 Nov 2022 | Results for 26 weeks to 24 Sep 2022
Slide 7: H1 2023 Financial review summary
H1 2023 Financial review summary ▪ Resilient financial performance in H1 2023, with increases in volumes, revenue, adjusted profit and margin ▪ First Rail earnings driven by the strong growth of open access; First Bus earnings lower reflecting cost inflation and the transition towards a more commerc
Slide 8: Financial summary
Financial summary Significant overall financial progress in H1 2023 H1 2023 H1 2022 H1 2023 change vs FY 2022 £m (continuing) (continuing) H1 2022 (continuing) (continuing) Revenue 2,212.4 2,139.1 +73.3 4,591.1 Group attributable adjusted profit1 30.8 13.3 +17.5 36.2 Adjusted2 - Operating profit 66.
Slide 9: First Rail financial performance
First Rail financial performance H1 2023 contribution to attributable net income increasing, with open access ahead of plan £m H1 2023 H1 2022 Change ▪ The four management fee-based operations recorded performance fees at management’s best estimate in aggregate for H1 2023 Management fee-based reven
Slide 10: First Bus H1 2023 financial performance
First Bus H1 2023 financial performance Earnings outturn reflects the transitional period the industry is working through ▪ Revenue +9% vs H1 2022, reflecting improving volumes and yields, £m H1 2023 H1 2022 Change partly offset by lower grant receipts Revenue 427.7 392.5 +35.2 Adj. operating profit
Slide 11: Substantial increase in Group adjusted attributable profit
Substantial increase in Group adjusted attributable profit Our planning and dividend policy focuses on underlying fees from rail contracts to look through IFRS 16 distortions ▪ Group adjusted attributable profit in line with £m H1 2023 H1 2022 Change management expectations in H1 2023 Group adjusted
Slide 12: FY 2023 financial outlook
FY 2023 financial outlook ▪ While clearly sensitive to consumer spending and inflation trends, expect sequential progress in H2 2023, improved performance First Bus driven by recent higher passenger volumes and driver resource pressures easing in certain locations ▪ Expect higher profit from open ac
Slide 13: Operational performance
Operational performance First
Slide 14: First Rail's management fee-based operations
First Rail’s management fee-based operations Focused on operational delivery for passengers in a challenging environment H1 2023 attributable net income bridge ▪ Industrial action across the rail sector has caused significant disruption for our passengers, although financial impact to date has been
Slide 15: Lumo and Hull Trains
Lumo and Hull Trains Our open access success demonstrates the potential for leveraging private sector experience and expertise to enhance modal shift and bring more passengers back to rail Both open access operations are primarily focused on leisure travel which has 1 experienced faster growth than
Slide 16: First Rail H2 2023 priorities
First Rail H2 2023 priorities ▪ Delivery for passengers at heart of the business ▪ Robust plans in place to deliver the level of service expected by our stakeholders in light of current challenges ▪ Avanti and TPE focused on return to a full schedule as new timetable is launched in December ▪ Progre
Slide 17: First Bus H1 2023 operating performance
First Bus H1 2023 operating performance Although constrained by changes in the funding model, inflation and related pressures in the near term, we are reshaping our business to improve margin as the sector transitions to a more commercial model ▪ Passenger volumes increasing, led by commercial (+32%
Slide 18: Business to Business ('B2B')
Business to Business (‘B2B’) We are well-placed to make use of our assets and capabilities to develop, diversify and grow within our core markets First Bus operates a number of B2B services across the UK: ▪ Somerset Passenger Services ▪ Transport for construction workers at Hinkley Point C nuclear p
Slide 19: First Bus fleet and infrastructure transition
First Bus fleet and infrastructure transition As we progress towards our 2035 decarbonisation target we are identifying opportunities to accelerate the growth of our EV fleet and generate adjacent revenue streams Caledonia Depot, Glasgow ▪ First Bus is committed to operating a zero-emission fleet by
Slide 20: First Bus H2 2023 priorities
First Bus H2 2023 priorities ▪ Delivery of sequential progress in revenue and profit, although sensitive to broader consumer and inflation trends ▪ Increasing agility to optimise pricing, networks and timetables to passenger demand, particularly once recovery funding tapers off ▪ Further cost saving
Slide 21: Strong foundations for future value creation
Strong foundations for future value creation ▪ Leading positions in bus and rail in the UK ▪ Government policy, demographics and environmental and social trends support public transport growth ▪ First Bus: continued investments in digital to support our pricing, network and other changes now underwa
Slide 22: Appendix
Appendix First
Slide 23: Lumo – contributing to shift from air travel to rail
Lumo – contributing to shift from air travel to rail ▪ April-August 2022: strong passenger demand on Lumo contributed to Rail overtaking Air travel between London and Edinburgh with Rail taking a 57% share of the Rail Air market (vs. 35% pre-pandemic) ▪ Lumo has contributed to a recovery in Rail tra
Slide 24: evo-rail
evo-rail ▪ Innovative track-to-train superfast rail-5G solution uses trackside poles to deliver over 1GB per second of internet broadband as a guaranteed service ▪ Rail-5G requires a fraction of the power of mobile 4G or 5G but communicates data up to 100 times faster than mobile 4G ▪ Developed by r
Slide 25: Mistral
Mistral ▪ Launched in 2021 – 14 products delivered via Customer App – Coaches, Solano Staff App - Two way orientation, occupancy, interface, provides crew with plan, monthly subscriptions as a Software as a Service and train service data, accepts solution facilities occupancy observations ▪ Products
Slide 26: H1 2023 Group cash flow
H1 2023 Group cash flow Underlying cash flow in line with expectations – with further progression in H2 2023 ▪ Rail management fees transfer up to Group Rail open Rail as dividends following signing of subsidiary £m First Bus management access and Group H1 2023 statutory accounts and hence are typic
Slide 27: Balance sheet and contingent sources of value
Balance sheet and contingent sources of value The Group now has a strong balance sheet and pension position, no significant legacy liabilities and increasing clarity on the remaining sources of value from the North American disposals First Bus and Group pensions Residual Greyhound assets and liabili
Slide 28: Appendix: Accounting for Rail
Appendix: Accounting for Rail FirstGroup includes alternative measures in the accounts that adjust for the underlying economics of the rail contracts: ▪ ‘Adjusted net debt’ excludes rail ring-fenced cash and IFRS 16 right of use assets ▪ ‘Adjusted profit after tax’ defined as First Bus and non-contr
Slide 29: Appendix: First Rail accounting
Appendix: First Rail accounting £m H1 2023 H1 2022 Change ▪ Inter-divisional eliminations: Majority of gross additional services revenue is currently secured from our Revenue from management fee-based operations 1,743.3 1,729.8 +13.5 management fee-based operations Revenue from open access and addit
Slide 30: Appendix: Reconciliation to First Rail-adjusted metrics
Appendix: Reconciliation to First Rail-adjusted metrics H1 2023 Movements H1 2023 Group Adjusted First Adjusted £m adjusted Rail earnings Gross up tax Actual interest earnings attributable to IFRS 16 and minority and tax interests after tax profit basis First Bus adjusted operating profit 20.7 - - -
Slide 31: Appendix: Divisional adjusted operating profit
Appendix: Divisional adjusted operating profit Revenue Operating profit1 Operating margin1 £m H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 H1 2022 First Bus 427.7 392.5 20.7 26.8 4.8% 6.8% First Rail 1,784.7 1,746.6 55.4 39.2 3.1% 2.2% Group items2 - - (10.0) (14.2) n/a n/a Continuing total 2,212.4 2,139
Slide 32: Appendix: Divisional EBITDA
Appendix: Divisional EBITDA Revenue EBITDA1 EBITDA margin1 £m H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 H1 2022 First Bus 427.7 392.5 51.0 55.5 11.9% 14.1% First Rail 1,784.7 1,746.6 305.6 304.2 17.1% 17.4% Group items2 - - (8.7) (12.4) n/a n/a Continuing total 2,212.4 2,139.1 347.9 347.3 15.7% 16.2%
Slide 33: Appendix: Other key profit and loss items
Appendix: Other key profit and loss items £m H1 2023 H1 2022 ▪ Group items: central costs £4.2m lower than prior year, reflecting changes implemented following North American disposals Adjusted profit/(loss)1 First Bus 20.7 26.8 ▪ Net finance costs: interest on £200m 6.875% 2024 bond and £50m First
Slide 34: Appendix: Net adjusting items
Appendix: Net adjusting items £(24.2)m in net adjusting items in H1 2023, principally the charge on the First Transit earnout receivable £m H1 2023 H1 2022 ▪ Continuing adjusting items consist of the loss on disposal of the First Scotland East business; Amortisation charges - (0.4) reorganisation co
Slide 35: Appendix: IFRS 16 (leases)
Appendix: IFRS 16 (leases) ▪ As at 24 September 2022, £1.8bn of leased assets were recognised as Right Of Use assets on the balance sheet. Rail track access payments, leases of <1 year, low values were excluded H1 2023 H1 2022 £m, Total Group Under IAS17 IFRS 16 effect Under IFRS 16 Under IFRS 16 Ad
Slide 36: Appendix: Diesel hedge position as at 7 November 2022
Appendix: Diesel hedge position as at 7 November 2022 UK H2 2023 FY 2024 FY 2025 ‘At risk’ volume (litres ‘m) 44m 88m 87m % hedged 97% 63% 10% Diesel rate ($/barrel) $84 $92 $107 Equivalent cost per litre 40p 46p 59p ▪ Prices include crude and refining cost but exclude delivery margins, duty, taxes
Slide 37: Appendix: Net finance costs and taxation
Appendix: Net finance costs and taxation £m H1 2023 H1 2022 Bonds 6.9 15.4 Bank borrowings 1.6 14.9 Senior unsecured loan notes - 3.2 Lease and asset-backed financial liabilities interest 20.7 24.6 Notional interest on long-term provisions 0.5 3.4 Notional interest on pensions (2.8) 5.8 Notional int
Slide 38: Appendix: Total capital expenditure and acquisitions
Appendix: Total capital expenditure and acquisitions Fixed asset / software additions Cash £m (including acquisitions) H1 2023 H1 2022 H1 2023 H1 2022 First Bus 46.8 8.7 46.1 9.9 First Rail 14.7 25.1 16.3 18.7 Group items - 0.4 - 0.2 Continuing 61.5 34.2 62.4 28.8 Discontinued - 105.4 - 110.9 Total
Slide 39: Appendix: Pensions
Appendix: Pensions Surplus/(Deficit) Cash contributions P&L charge1 £m 6m to Sep 12m to Mar 6m to Sep 6m to Sep 12m to Mar 6m to Sep Sep 2022 Mar 2022 Sep 2021 2022 2022 2021 2022 2022 2021 First Bus, Group and Hull 64.1 197.5 61.2 (10.1) 245.5 239.4 4.1 8.3 5.1 North America (3.9) (10.9) (47.4) 4.0
Slide 40: 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
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