Slide 1: FirstGroup H1 2024 Results
FirstGroup H1 2024 Results Thursday 23 November 2023
Slide 2: Agenda
Agenda 1. Overview 2. Financial review 3. Business review 4. Summary 2 23 November 2023 | Results for 27 weeks to 30 Sep 2023
Slide 3: Continued strong financial performance from First Bus and First Rail
Continued strong financial performance from First Bus and First Rail ▪ Strong financial performance in H1 2024: - Group Adjusted EPS increased to 8.1p (H1 2023: 4.6p1) - Adjusted net cash of £77.1m2 vs. £7.3m in H1 2023 ▪ Transformation of First Bus continues, and we are rapidly establishing ourselv
Slide 4: Agenda
Agenda 1. Overview 2. Financial review 3. Business review 4. Summary 4 23 November 2023 | Results for 27 weeks to 30 Sep 2023
Slide 5: Financial summary (continuing operations)
Financial summary (continuing operations) H1 2024 H1 2023 Change % £m Revenue 2,207.0 2,212.4 (0.2)% Adjusted operating profit1 100.6 66.1 +52% Adjusted profit before tax1 73.5 41.0 +79% Adjusted earnings2 56.5 34.0 +66% Adjusted earnings per share p2,3 8.1p 4.6p +76% Dividend per share p 1.5p 0.9p
Slide 6: First Bus: on track to deliver 10% margin target
First Bus: on track to deliver 10% margin target Bus revenue (£m) and adjusted operating profit margin (12 months) ▪ Revenue +18% vs H1 2023 mainly reflecting increased passenger volumes, service improvements and positive pricing impact, offset by £19.2m reduction in funding ▪ Adjusted operated prof
Slide 7: First Rail: continued outperformance in open access
First Rail: continued outperformance in open access Significant increase across the First Rail portfolio, adjusted operating profit up £21.6m vs. H1 2023 £m H1 2024 H1 2023 Change GWR 11.2 11.0 +0.2 ▪ Attributable net income from management fee-based SWR 4.8 2.7 +2.1 operations up £4.1m WCP (incorpo
Slide 8: Substantial increase in Group adjusted earnings
Substantial increase in Group adjusted earnings We have delivered another strong set of results and continue to grow and diversify our earnings ▪ First Bus increase due to passenger volume growth, pricing improvements and efficiencies more than offsetting impacts of inflation and reduced funding ▪ R
Slide 9: Resilient cash generation
Resilient cash generation £46m of cash generated from operations ▪ Post tax management fee from TOCs received a year in arrears and paid ▪ Disposal proceeds comprise bus vehicle sales and the Southampton depot mainly in H2 ▪ Part payment of First Transit Earnout received in July 2023; balance of ▪ W
Slide 10: £1 billion reduction in gross pensions liability
£1 billion reduction in gross pensions liability ▪ Termination of participation in two First Bus Local Government Pension Schemes (LGPS) effective 31 October 2023 totalling c.£713m (as at 30 Sep 2023) resulting in: - estimated net cash inflow of up to £15m after costs - anticipated £2-3m annualised
Slide 11: FY 2024 full year financial outlook
FY 2024 full year financial outlook ▪ First Bus: some further progress against our expectations anticipated in H2 2024, including the impact of Hitachi JV Earnings ▪ First Rail: financial performance anticipated to be broadly in line with our expectations for H2 2024 ▪ P&L net interest cost c.£65m o
Slide 12: Agenda
Agenda 1. Overview 2. Financial review 3. Business review 4. Summary 12 23 November 2023 | Results for 27 weeks to 30 Sep 2023
Slide 13: First Bus transformation continues at pace
First Bus transformation continues at pace We are recruiting more drivers, delivering better services and driving operational efficiencies as we progress towards our 10% margin target ▪ Revenue per mile +22%, supported by strong growth in passenger volumes and improvements in network and service rel
Slide 14: First Bus continues to focus on growth opportunities
First Bus continues to focus on growth opportunities We are capitalising on opportunities to make use of our assets and capabilities to grow our business Adjacent Services Franchising and partnerships Electrification ▪ Adjacent Services delivered revenue of £116m ▪ Rochdale franchise contracts award
Slide 15: Hitachi Strategic Partnership
Hitachi Strategic Partnership A pioneering strategic alliance that will provide greater visibility of our financial commitment on First Bus decarbonisation, increased efficiencies and the retention of much of the residual battery value ▪ The partnership will provide: - a newly formed 50:50 joint ven
Slide 16: First Rail: strong delivery on management contracts
First Rail: strong delivery on management contracts As one of the most experienced UK operators we are uniquely positioned to work with our partners to add value and provide better rail services ▪ West Coast Partnership awarded nine-year National Rail Contract ('NRC') to October 2032 - includes the
Slide 17: Open access rail continues to significantly improve financial performance
Open access rail continues to significantly improve financial performance Driving modal shift to rail and outperforming expectations thanks to strong demand, effective yield management and good service delivery LUMO H1 2024 H1 2023 Change HULL TRAINS H1 2024 H1 2023 Change Revenue (£m) 26.1 18.3 +43
Slide 18: Agenda
Agenda 1. Overview 2. Financial review 3. Business review 4. Summary 18 23 November 2023 | Results for 27 weeks to 30 Sep 2023
Slide 19: Four strategic priorities to drive sustainable growth and earnings
Four strategic priorities to drive sustainable growth and earnings We will leverage our 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 portfo
Slide 20: Significant financial progress and well positioned for the future
Significant financial progress and well positioned for the future FirstGroup is a resilient and profitable business delivering sustainable growth from our leading bus and rail operations, despite the challenging economic environment ▪ First Bus: we are on track to deliver a 10% operating margin ▪ De
Slide 21: Appendix
Appendix 21 23 November 2023 | Results for 27 weeks to 30 Sep 2023
Slide 22: Building on our strong sustainability foundations
Appendix: Building on our strong sustainability foundations Public transport is central to levelling up, urbanisation and decarbonisation agendas as well as a source of green jobs throughout the supply chain Selected FirstGroup credentials and ratings: Responsible business remains intrinsic to our o
Slide 23: First Rail accounting
Appendix: First Rail accounting FirstGroup includes alternative measures in the accounts that adjust for the underlying economics of the rail contracts: ▪ Attributable net income from management fee-based operations: cash fee income attributable to the Group from these businesses – with adj. £m H1 2
Slide 24: Rail management fee-based operations fees summary
Appendix: Rail management fee-based operations fees summary SWR National GWR National WCP National £m Rail Contract Rail Contract Rail Contract (70% share) (70% share) Fixed annual management fee 3.3 6.9 3.6 Variable fees Up to 9.9 Up to 17.8 Up to 11.1 Annual fee opportunity range (net of SWR and W
Slide 25: Divisional adjusted operating profit
Appendix: Divisional adjusted operating profit Revenue Operating profit1 Operating margin1 £m H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 First Bus 504.9 427.7 36.0 20.7 7.1% 4.8% First Rail 1,721.9 1,784.7 77.0 55.4 4.5% 3.1% Group items (19.8) - (12.4) (10.0) n/a n/a Continuing total 2,207.0 2
Slide 26: Divisional EBITDA
Appendix: Divisional EBITDA Revenue EBITDA1 EBITDA margin1 £m H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 First Bus 504.9 427.7 68.8 51.0 13.6% 11.9% First Rail 1,721.9 1,784.7 286.8 305.6 16.7% 17.1% Group items2 (19.8) - (11.1) (8.7) n/a n/a Continuing total 2,207.0 2,212.4 344.5 347.9 15.6% 1
Slide 27: Group adjusted earnings
Appendix: Group adjusted earnings £m H1 2024 H1 2023 Change FY 2023 Group adjusted earnings comprises: - First Bus adjusted operating profit 36.0 20.7 +15.3 58.4 - Adjusted operating profit from rail management fee operations excl IFRS161 35.8 25.8 +10.0 54.0 - Adjusted operating profit from rail op
Slide 28: Reconciliation to Adjusted Earnings
Appendix: Reconciliation to Adjusted Earnings H1 2024 H1 2023 IFRS16 for rail Adjusted excl IFRS16 for rail Adjusted excl £m management fee IFRS16 from rail management fee IFRS16 from rail Adjusted Adjusted ops management fee ops management fee ops ops First Bus adjusted operating profit 36.0 - 36.0
Slide 29: Reconciliation of Statutory to Adjusted cash flows
Appendix: Reconciliation of Statutory to Adjusted cash flows Adjusting Ring fenced cash £m Statutory IFRS16 Reclassifications Adjusted items movements EBITDA 202.5 142.0 (35.9) (237.0) - 71.6 Management fees - 5.8 - - 5.8 Working capital (70.0) (5.2) 78.2 (23.1) (11.6) (31.7) Cash flow from operatio
Slide 30: Total capital expenditure and acquisitions
Appendix: Total capital expenditure and acquisitions Fixed asset / software additions Cash £m (including acquisitions) H1 2024 H1 2023 H1 2024 H1 2023 First Bus 94.5 46.8 88.7 46.1 First Rail 20.4 14.7 19.5 16.3 Group items 0.7 - 0.1 - Total 115.6 61.5 108.3 62.4 ▪ In H1 2024 First Bus did not enter
Slide 31: IFRS 16 (leases)
Appendix: IFRS 16 (leases) ▪ As at 30 September 2023, £1.5bn of leased assets were recognised as Right of Use assets on the balance sheet. H1 2024 H1 2023 £m Under IAS17 IFRS 16 effect Under IFRS 16 Under IFRS 16 Adjusted and Continuing EBITDA 107.5 +237.0 344.5 347.9 Operating profit 80.2 +20.4 100
Slide 32: Net finance costs and taxation
Appendix: Net finance costs and taxation £m H1 2024 H1 2023 Bonds 6.5 6.9 Bank borrowings 3.2 1.6 Lease and asset backed financial liabilities interest 28.4 20.7 Notional interest - pensions (1.5) (2.8) Notional interest - other - 0.6 Bank interest income (9.5) (2.2) Net finance costs 27.1 24.8 Taxa
Slide 33: Diesel and Electricity hedge positions
Appendix: Diesel and Electricity hedge positions UK Bus Diesel Exposure H2 2024 FY 2025 FY 2026 Annual ‘At risk’ volume (litres ‘m) 41.2m 69.5m 57.9m % hedged 81% 62% 17% Diesel rate ($/barrel) 96.5 99.43 99.64 Equivalent cost per litre 46p 51p 51p ▪ Prices include crude and refining cost but exclud
Slide 34: 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