FirstGroup plc · LSE:FGP
FirstGroup — FY2017 Earnings Presentation
42 slides from FirstGroup's earnings presentation, Jun 1, 2017
Slide 1: FirstGroup plc Full year results
FirstGroup plc Full year results For the twelve months to 31 March 2017 Thursday 1 June 2017 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017
Slide 2: Tim O'Toole, Chief Executive
Tim O'Toole Chief Executive 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017 2
Slide 3: Overview
Overview ▪ Significant improvement in operating results and substantial cash generation delivered as planned ▪ Maintained our consistent and disciplined approach to bidding for future business throughout the Group ▪ Continuing to invest in technology to drive growth by simplifying our services for c
Slide 4: Financial review
Matthew Gregory Chief Financial Officer Financial review 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017 4
Slide 5: Financial overview
Financial overview ▪ Revenue £5,653.3m (2016: £5,218.1m), +8.3% driven mainly by currency ▪ Adjusted operating profit £339.0m (2016: £300.7m) reflects several factors: − 250bps improvement in First Student margin − Rebased First Rail margin under new contracts − Significant currency effects, with fa
Slide 6: Financial summary
Financial summary Change in £m Mar 2017 Mar 2016 Change constant currency1 Revenue 5,653.3 5,218.1 +8.3% (0.5)% Adjusted2 - Operating profit 339.0 300.7 +12.7% +2.3% - Margin % 6.0% 5.8% +20bps +20bps - Net finance costs (132.0) (132.4) (0.3)% - Profit before tax 207.0 168.3 +23.0% - Effective tax r
Slide 7: Revenue performance
Revenue performance ▪ Growth in First Transit and First Rail (like-for-like), with Mar 2017 £m Change revenue (constant fx) First Student flat First Student 1,780.3 (0.4)% First Transit 1,042.0 +4.4% ▪ Decreases in Greyhound and First Bus Greyhound 684.7 (2.0)% First Bus 861.7 (1.4)% ▪ First Rail re
Slide 8: Operating performance
Operating performance ▪ Group margin +20bps in constant currency Mar 2017 £m FY 2017 Margin change operating profit1 margin1 (constant fx) First Student 171.1 9.6% +250bps ▪ Significant improvement in First Student margin; First Transit 73.3 7.0% +10bps Rail margin rebased under new contracts Greyho
Slide 9: Income statement – continued
Income statement – continued £m Mar 2017 Mar 2016 Change Adjusted1 Operating profit 339.0 300.7 +12.7% Broadly flat, Net finance costs (132.0) (132.4) principally bonds Profit before tax 207.0 168.3 +23.0% Tax (53.8) (38.7) P&L tax rate to - Effective tax rate % 26.0% 23.0% +300bps increase further
Slide 10: Net cash flow
Net cash flow (£m) 686.6 Operating cash flow / cash conversion1: Mar 2017: £301.1m / 89% Mar 2016: £192.0m / 64% 43.0 (323.9) 6.4 301.1 (80.4) (30.6) (37.6) 147.2 Disposal proceeds (116.3) First Rail capex other provisions EBITDA Working capital / Interest and tax Pensions charge in excess of P&L Op
Slide 11: Financial position
Financial position ▪ Strong liquidity and stable financing position with net debt of £1,289.9m − Headroom under committed facilities plus free cash: £941.1m (Mar 2016: £940.2m) − Net debt: EBITDA ratio 1.9x (Mar 2016: 2.3x) − Long term facilities in place – average maturity 3.6 years (Mar 2016: 4.4
Slide 12: Guidance
Guidance ▪ Mixed trading environment with opportunities for steady progress in the North American divisions but continued economic uncertainty in the UK ▪ Further progress expected from the Road divisions, with First Rail margin reducing; continued free cash generation expected after disciplined inv
Slide 13: Business review
Tim O'Toole Chief Executive Business review 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017 13
Slide 14: First Student
First Student ▪ Significant margin improvement despite ongoing driver shortages ▪ Benefiting from our market leadership position and unique scale − Cost efficiency: best practice sharing and standardised processes, First Transit management of maintenance − Pricing strategy: smaller but higher return
Slide 15: First Transit
First Transit ▪ Team returned the business to growth and maintained margin in the year ▪ Making the most of our transit management expertise and track record − Continuous bid discipline and rigorous execution − Sustained, attractive margins given modest capital employed − Flexible approach to market
Slide 16: Greyhound
Greyhound ▪ Passenger volumes down for year but evidence of stability in second half ▪ Increasing ability to take advantage of unique nationwide network and iconic brand − Flexible cost base, responsive to passenger demand patterns − Real-time pricing, yield management, online and mobile – Greyhound
Slide 17: First Bus
First Bus ▪ Industry conditions impeding overall volume growth (congestion, high street retail trends, funding cuts, modal shift) ▪ Portfolio of local businesses each requiring a varying mix of actions to restore overall profitable growth − Fares, networks and tickets, fleet investment, local partne
Slide 18: First Rail
First Rail ▪ Short term challenges but well positioned for the long term ▪ Continue to deploy our breadth of rail expertise and experience for our passengers, notwithstanding market slowdown − GWR direct award providing continuity through infrastructure upheaval − TPE growth driven by introduction o
Slide 19: Summary
Summary ▪ Significant improvement in operating results and substantial cash generation delivered as planned ▪ Maintained our consistent and disciplined approach to bidding for future business throughout the Group ▪ Continuing to invest in technology to drive growth by simplifying our services for cu
Slide 20: FirstGroup plc Full year results
FirstGroup plc Full year results For the twelve months to 31 March 2017 Thursday 1 June 2017 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017
Slide 21: Appendices
Appendices 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017 21
Slide 22: Financial results
Financial results £m Mar 2017 Mar 2016 Change Revenue 5,653.3 5,218.1 +8.3% EBITDA1 686.6 615.9 +11.5% EBITDA margin % 12.1% 11.8% +30bps Operating profit2 339.0 300.7 +12.7% Operating profit margin % 6.0% 5.8% +20bps Net finance costs (132.0) (132.4) (0.3)% Profit before tax2 207.0 168.3 +23.0% Non
Slide 23: Divisional performance
Divisional performance Revenue Operating profit1 Operating margin1 Mar 2017 Mar 2016 Mar 2017 Mar 2016 Mar 2017 Mar 2016 £m First Student 1,780.3 1,553.5 171.1 112.6 9.6% 7.2% First Transit 1,042.0 864.8 73.3 60.1 7.0% 6.9% Greyhound 684.7 605.1 42.6 35.5 6.2% 5.9% First Bus 861.7 870.9 37.0 52.0 4.
Slide 24: First Student
First Student $m Mar 2017 Mar 2016 Change Revenue 2,323.3 2,332.7 (0.4)% Operating profit1 222.0 165.0 +34.5% Margin % 9.6% 7.1% +250bps $m Revenue Operating profit1 Mar 2016 2,332.7 165.0 Operating days 37.9 15.4 Weather (25.3) (13.9) Fuel rate (3.4) 12.2 Pricing above inflation 33.3 33.3 Net growt
Slide 25: First Transit
First Transit $m Mar 2017 Mar 2016 Change Revenue 1,358.9 1,303.4 +4.3% Operating profit1 95.2 90.6 +5.1% Margin % 7.0% 7.0% flat $m Revenue Operating profit1 Mar 2016 1,303.4 90.6 Growth / new business 34.1 6.1 Driver costs - (6.1) Inflation / FX / other 21.4 4.6 Mar 2017 1,358.9 95.2 1 Before amor
Slide 26: Greyhound
Greyhound $m Mar 2017 Mar 2016 Change Revenue 894.0 914.0 (2.2)% Operating profit1 55.2 54.4 +1.5% Margin % 6.2% 6.0% +20bps $m Revenue Operating profit1 Mar 2016 914.0 54.4 Revenue (19.4) (19.4) Fuel cost savings – rate - 8.6 Management actions - 32.3 Cost inflation - (17.0) FX / other (0.6) (3.7)
Slide 27: First Bus
First Bus £m Mar 2017 Mar 2016 Change Revenue 861.7 870.9 (1.1)% Operating profit1 37.0 52.0 (28.8)% Margin % 4.3% 6.0% (170)bps £m Revenue Operating profit1 Mar 2016 870.9 52.0 Revenue (4.4) (4.4) Inflation / pension - (17.9) Fuel cost savings – rate - 14.0 Fuel – FX - (11.5) Depot closures and act
Slide 28: First Rail
First Rail £m Mar 2017 Mar 2016 Change Revenue 1,268.8 1,308.4 (3.0)% Operating profit1 53.8 72.9 (26.2)% Margin % 4.2% 5.6% (140)bps 1 Before amortisation charges and certain other items 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017 28
Slide 29: First Rail passenger revenue growth
First Rail passenger revenue growth Mar 2017 Mar 2016 Great Western Railway (GWR) 0.3% 6.1% TransPennine Express (TPE) 5.9% 6.0% Hull Trains 5.8% 15.8% Total 1.3% 6.3% ▪ Like-for-like volume increased by 0.7% 1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017 29
Slide 30: Non-GAAP adjustments
Non-GAAP adjustments ▪ During the year the sale of a £m Mar 2017 Mar 2016 Greyhound terminal in San Jose, Amortisation charges (60.2) (51.9) California was completed for which resulted in a gain on sale of £21.6m Gain on disposal of property 21.6 - Restructuring and reorganisation costs (16.8) - ▪ T
Slide 31: Current diesel hedge position
Current diesel hedge position UK North America Year to 31 March 2017/18 2018/19 2019/20 2017/18 2018/19 2019/20 Annual volume (barrels 'm) 1.9 1.7 1.3 1.3 1.3 1.3 % hedged 89% 55% 15% 57% 28% 18% Crude rate ($/barrel) $60.14 $55.31 $47.97 $57.25 $49.76 $49.59 Diesel rate ($/barrel) $74.63 $72.71 $67
Slide 32: Foreign exchange
Foreign exchange ▪ Lower US Dollar compared to prior year balance sheet date: 31 Mar 2017 31 Mar 2016 Closing rate for the balance sheet US$ $1.25 $1.41 Closing rate for the balance sheet CAN$ $1.67 $1.87 ▪ Lower US Dollar compared to prior year effective rate: Year to Year to 31 Mar 2017 31 Mar 201
Slide 33: Foreign exchange
Foreign exchange Mar 2016 Translation UK fuel Non- £m Mar 2016 constant Mar 2017 impact impact currency currency Revenue 5,218.1 +463.3 5,681.4 - (28.1) 5,653.3 - North American divisions 3,023.4 +460.5 3,483.9 - +23.1 3,507.0 - UK divisions 2,179.3 +2.8 2,182.1 - (51.6) 2,130.5 - Group items 15.4 -
Slide 34: Net finance costs and taxation
Net finance costs and taxation Net finance costs, £m Mar 2017 Mar 2016 Bonds 83.7 84.2 Bank borrowings 11.4 13.0 Loan notes 1.0 1.0 Senior unsecured loan notes 4.3 4.3 Finance lease interest 6.4 8.9 Notional interest on long term provisions 17.5 14.8 Notional interest on pensions 8.9 7.6 Investment
Slide 35: EBITDA by division
EBITDA by division Revenue EBITDA1 EBITDA margin1 Mar 2017 Mar 2016 Mar 2017 Mar 2016 Mar 2017 Mar 2016 £m First Student 1,780.3 1,553.5 348.7 266.4 19.6% 17.1% First Transit 1,042.0 864.8 91.9 74.7 8.8% 8.6% Greyhound 684.7 605.1 79.4 69.7 11.6% 11.5% First Bus 861.7 870.9 104.5 113.4 12.1% 13.0% F
Slide 36: Total capital expenditure
Total capital expenditure Cash Fixed asset/Software additions £m Mar 2017 Mar 2016 Mar 2017 Mar 2016 First Student 198.7 245.7 165.9 209.2 First Transit 17.8 20.5 17.8 19.1 Greyhound 30.1 21.1 31.7 24.8 First Bus 74.4 57.6 63.9 91.3 First Rail 80.4 58.1 75.4 65.4 Group items 2.9 2.2 2.9 2.2 Total 40
Slide 37: Capital expenditure
Capital expenditure £m Mar Mar ▪ Disciplined reinvestment in passenger 2017 2016 carrying fleet and IT upgrade Passenger carrying vehicles (PCV) 224.7 282.7 programmes continue IT including transformation & software 33.3 28.9 Facilities and depot development 12.6 18.2 ▪ Cash capital investment at £2
Slide 38: First Rail ring-fenced cash and bonds
First Rail ring-fenced cash and bonds First Rail ring-fenced cash, £m Mar 2017 Mar 2016 GWR 211.9 177.2 FTPE 43.9 40.3 Total 255.8 217.5 First Rail bonds, £m Mar 2017 Mar 2016 GWR performance bond 10.0 10.0 GWR season ticket bond 28.4 28.8 FTPE performance bond - 4.4 TPE performance bond 15.0 - TPE
Slide 39: Debt profile
Debt profile £350m £300m £300m 8.75% £325m 8.125% Apr 2021 5.25% Sept 2018 £250m bond1 Nov 2022 bond 6.125% bond £200m Jan 2019 bond1 £200m 6.875% Sept 2024 £100m bond £0m H1 21/22 H1 24/25 FY 17/18 H1 17/18 H1 18/19 FY 18/19 H1 19/20 FY 19/20 H1 20/21 FY 20/21 FY 21/22 H1 22/23 FY 22/23 H1 23/24 FY
Slide 40: Pensions
Pensions Deficit Cash contributions P&L charge1 £m Mar Mar Mar Mar Mar Mar Mar Mar Mar 2017 2016 2015 2017 2016 2015 2017 2016 2015 North America (216.7) (212.5) (184.8) 14.0 20.1 16.5 9.9 7.6 7.2 First Bus (139.8) (57.5) (53.5) 50.0 41.6 41.5 16.7 20.2 25.5 First Rail (2.0) (0.9) (1.1) 21.9 27.1 48
Slide 41: ROCE
ROCE Group Road divisions ROCE ROCE As at 31 March 2016 7.2% 5.1% Foreign exchange (0.5)% (0.1)% ROCE at constant currency 6.7% 5.0% Rail portfolio (0.2)% ̶ Road divisions trading 0.8% 0.8% Tax rate / other ̶ (0.1)% As at 31 March 2017 7.3% 5.7% 1 June 2017 FirstGroup full year results for the twelv
Slide 42: Disclaimer
Disclaimer Certain statements included or incorporated by reference within this presentation may constitute “forward looking statements" in respect of FirstGroup plc's operations, performance, prospects and/or financial condition. Such statements are based on our current expectations and beliefs con