Firstgroup Plc · LSE:FGP
Firstgroup — Investor Day (March 2024)
43 slides from Firstgroup's investor day presentation, Mar 13, 2024
Slide 1: First Rail Teach-in
FirstGroup First Rail Teach-in 13 March 2024
Slide 2: Session One: Agenda & Presenters
Session One: Agenda & Presenters Agenda FirstGroup team Welcome & Introduction Graham Sutherland Chief Executive Officer 09:30 Graham Sutherland Ryan Mangold Chief Financial Officer Group accounting for rail Ryan Mangold First Rail team First Rail & the UK rail industry overview Steve Montgomery, Ma
Slide 3: FirstGroup's strategic priorities
FirstGroup’s strategic priorities We have four key strategic drivers to create value-accretive sustainable growth, underpinned by our strong balance sheet and disciplined capital allocation policy Deliver, day in day out Drive modal shift Diversify our portfolio Lead in environmental and social sust
Slide 4: First Rail in focus
First Rail in focus We have years of experience working successfully with a wide range of partners under various forms of contract types and delivering significant rail infrastructure projects 250 Group Adjusted Operating Profit (£m) First Rail has been one of the largest UK rail operators for ove
Slide 5: Accounting for rail
Accounting for rail First
Slide 6: Group accounting for rail
Group accounting for rail The Group includes alternative measures in its financial statements that adjust for the underlying economics of the rail contracts Although the Group has very limited revenue, cost and contingent capital risk under the DfT National Rail Contracts (‘NRC’s), under IFRS16 di
Slide 7: Group Adjusted earnings
Group Adjusted earnings Our planning and dividend policy focus on underlying fees from rail contracts to look through IFRS 16 distortions £m FY 2022 FY 2023 2024 LTM Group Adjusted earnings comprise: - First Bus Adjusted operating profit1 45.2 58.4 73.7 - First Rail DfT TOCs Adjusted operating profi
Slide 8: First Rail and the UK Rail industry
First Rail and the UK Rail industry
Slide 9: UK Rail Industry Overview
UK Rail Industry Overview c.£13bn1 operating expenditure; c.£9bn fare and other operator income in FY 2023 (with net subsidy of c.£4.4bn1) 25 Train Operating Companies (‘TOC’s) including four Open Access operators in the UK - four TOCs currently operated by Government’s Operator of Last Resort (
Slide 10: First Rail overview
First Rail overview Focused on operational delivery, adding value for our stakeholders, making use of our capabilities to grow our Additional Services businesses and building on the success of our Open Access operations First Rail’s operations include: - Three Government contracted Train Operating
Slide 11: Financial highlights and contracts overview
Financial highlights and contracts overview
Slide 12: First Rail's evolving platform value
First Rail’s evolving platform value Our expertise and capabilities have allowed us to navigate through a number of different contract types, build out our core contracted operations and grow our Open Access and Additional Services businesses We have delivered revenue and profit growth under a num
Slide 13: National Rail Contracts
National Rail Contracts More consistent and resilient cash generation for operators with a far better balance of risk and reward Concession-based National Rail Contracts (‘NRC’s) were introduced during the Covid-19 pandemic, changing the franchising structure in place since 1990s DfT contracted
Slide 14: First Rail's financial performance
First Rail’s financial performance Adjusted operating profit1 (£m) FY 2021 FY 2022 FY 2023 2024 LTM First Rail reports 13 four-weekly periods per annum GWR 54.7 43.9 47.4 50.9 Passenger volume changes and industrial action have SWR 20.8 19.4 14.5 19.4 limited impact on fee income under the terms
Slide 15: DfT-contracted Train Operating Companies
DfT-contracted Train Operating Companies
Slide 16: Great Western Railway
Great Western Railway National Rail Contract to June 2028 with a minimum core term to June 2025 GWR also operates services for Heathrow Express (contract sits outside of the NRC) Fleet and infrastructure programmes delivered for our government partners include: - new or refurbished trains intr
Slide 17: South Western Railway (70% FGP 30% MTR)
South Western Railway (70% FGP 30% MTR) National Rail Contract to May 2025 Fleet and infrastructure programmes delivered for our government partners include: - Isle of Wight’s Island Line fully reopened in 2023 following £26m investment to re- connect with ferries - introduction of 90 new Alstom
Slide 18: West Coast Partnership (70% FGP 30% Trenitalia)
West Coast Partnership (70% FGP 30% Trenitalia) Nine-year National Rail Contract to October 2032, with minimum three-year core term to October 2026 WCP NRC comprises Avanti West Coast and West Coast Partnership Development, the shadow operator for the HS2 programme Fleet, infrastructure & cust
Slide 19: Additional Services
Additional Services First 9
Slide 20: Scaling our Additional Services businesses to create more value
Scaling our Additional Services businesses to create more value We are using our in-house expertise to grow our Additional Services businesses with the opportunity to sell into the rest of the rail sector We developed a number of affiliate services and products to support our TOCs and are now succes
Slide 21: First Rail Sustainability Highlights
First Rail Sustainability Highlights
Slide 22: First Rail sustainability overview
First Rail sustainability overview Leveraging both First Rail and the Group’s expertise and capabilities, we strive to be leaders in environmental and social sustainability Selected FirstGroup credentials and ratings: Environment Fleet decarbonisation strategy: we are successfully introducing and
Slide 23: First
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Slide 24: Session Two: Agenda
Session Two: Agenda Agenda Introduction 11:00 Graham Sutherland UK Open Access overview Steve Montgomery Hull Trains overview David Statham Lumo overview David Statham Growth markets David Statham Conclusion Graham Sutherland 11:45 Q&A 12:30 Lunch 24 13 March 2024 | FirstGroup plc First Rail Teach-i
Slide 25: Introduction
Introduction First
Slide 26: Introduction
Introduction The success of our Open Access operating companies demonstrates that we have the experience to innovate and create growth in the rail sector Lumo and Hull Trains have outperformed expectations, driven by high demand and effective yield management; revenues increased by c.40% in H1 202
Slide 27: Open Access overview
Open Access overview First
Slide 28: Open Access in the UK
Open Access in the UK Open Access operators bear all commercial risk and opportunity and make all commercial decisions Open Access operators are awarded Track Access Agreements by the Office of Rail and • Desktop research to identify new route and gaps in existing timetables that will allow Road (
Slide 29: The benefits of Open Access
The benefits of Open Access With their experience and entrepreneurial approach, Open Access operators have proven successful in meeting challenges and driving innovation and encouraging passengers back to rail Revenue Generative Underserved markets Open Access can grow the market for existing Open A
Slide 30: Hull Trains
Hull Trains First
Slide 31: Hull Trains – connecting communities and growing passenger demand
Hull Trains – connecting communities and growing passenger demand Launched Sep 2000; Track Access Agreement to Dec 2032 (has been renewed / extended three times) HULL TRAINS FY 2022 FY 2023 2024 LTM New fleet of five Hitachi Paragon bi-mode trains introduced in 2019, Revenue (£m) 19.9 32.1 37.5
Slide 32: Hull Trains' sustainability credentials
Hull Trains’ sustainability credentials “Their commitment to excellence and innovation has put Hull on the map as a destination for connectivity and progress” Karl Turner, MP for Hull East Environment 65% decrease in CO2 emissions following introduction of bi-mode trains in 2019 Travelling by Hu
Slide 33: Lumo
Lumo First
Slide 34: Lumo – a modern, efficient operation driving demand and modal shift
Lumo – a modern, efficient operation driving demand and modal shift Application submitted in 2015 with access rights agreed in 2016 for a 2021 launch; Track Access Agreement to May 2033 LUMO FY 2022 FY 2023 2024 LTM Fully operational since April 2022; by Nov 2023 had carried more than 2m Revenue
Slide 35: Lumo's sustainability credentials
Lumo’s sustainability credentials “Lumo is providing more journeys, delivering environmental benefits and helping bring more people to Edinburgh and beyond.” Liz McAreavey, Chief Executive, Edinburgh Chamber of Commerce Environment Independent research report shows that a London-Edinburgh trip wit
Slide 36: Growth markets
Growth markets First
Slide 37: Growth markets
Growth markets We believe there are attractive opportunities for us to grow our UK Open Access business, participate in other UK opportunities and continue to monitor markets in Europe as they evolve We have a disciplined capital allocation policy and a strict set of criteria when evaluating oppor
Slide 38: Expanding our UK Open Access operations
Expanding our UK Open Access operations We are delivering growth through adding capacity, driving operational efficiencies, enhancing timetables and applying for new and complementary routes where there is proven demand and capacity Adding capacity: - additional 4,500 seats recently added to exist
Slide 39: Hull Trains and Lumo extensions
Hull Trains and Lumo extensions Our proposed service extensions are based on growing the market for rail, connecting underserved markets and gaining mode share from car and coach First phase of application for a new Hull Trains Open Access service between London and Sheffield submitted to ORR on 5
Slide 40: Developments in the European rail market
Developments in the European rail market As the market in Europe opens up there are opportunities for new Open Access entrants and competitively bid contracts, with similar regulatory models to the UK EU Fourth Railway Package adopted in 2016 - separates infrastructure from operating services with
Slide 41: Conclusion
Conclusion First 7
Slide 42: Conclusion
Conclusion We are a leading, highly experienced operator with a clear strategy to deliver for our stakeholders, grow and diversify our portfolio and lead in environmental and social sustainability Focussed on operational excellence to improve customer experience, reliability and cost efficiencies
Slide 43: Important notice
Important notice The information in this presentation is all publically available, either from the Company’s own publically available materials, or from publically available data sources. This presentation includes statements that are, or may be deemed to be, forward-looking statements. These forwar