Business
Half-year Report
Half-year Report.
About this update from Firstgroup Plc
[{"type":"text","content":"\n\n \n \n\n\n\n\n FIRSTGROUP PLC HALF-YEARLY REPORT FOR THE 26 WEEKS TO 28 SEPTEMBER 2024 A robust operational and financial performance in H1 2025 leaves the Group slightly ahead of full year expectations, with the Board announcing an additional buyback programme. Highlights \t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t \t\t\t Adjusted revenue growth to £649.6m (H1 2024 £634.8m) reflecting strong underlying performance in First Bus and good demand in First Rail open access \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Group adjusted operating profit £100.8m; H1 2024 was positively affected by an extra week of trading and a c.£13m uplift from higher than accrued final FY 2023 variable fee awards in the First Rail DfT Train Operating Companies (‘DfT TOCs’) \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Adjusted EPS of 8.5p for continuing operations (H1 2024: 8.1p) \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Interim dividend of 1.7p per share declared (H1 2024: 1.5p per share) \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Additional on market share buyback programme of £50m announced \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Strong balance sheet maintained; adjusted net debt at period end of £0.2m \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Recent strategic acquisitions in both divisions that will grow First Bus Adjacent Services and increase First Rail’s open access capacity \t\t\t \t\t \t \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t H1 2025 (£m) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t H1 2024 (£m) \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t Cont. \t\t\t \t\t\t \t\t\t Disc. \t\t\t \t\t\t \t\t\t Total \t\t\t \t\t\t \t\t\t Cont. \t\t\t \t\t\t \t\t\t Disc. \t\t\t \t\t\t \t\t\t Total \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted revenue 1 \t\t\t \t\t\t \t\t\t 649.6 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 649.6 \t\t\t \t\t\t \t\t\t 634.8 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 634.8 \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted operating profit/(loss) 2 \t\t\t \t\t\t \t\t\t 100.8 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 100.8 \t\t\t \t\t\t \t\t\t 100.6 \t\t\t \t\t\t \t\t\t (2.2) \t\t\t \t\t\t \t\t\t 98.4 \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted operating profit margin \t\t\t \t\t\t \t\t\t 15.5% \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 15.5% \t\t\t \t\t\t \t\t\t 15.8% \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 15.5% \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted profit/(loss) before tax 2 \t\t\t \t\t\t \t\t\t 70.8 \t\t\t \t\t\t \t\t\t (0.1) \t\t\t \t\t\t \t\t\t 70.7 \t\t\t \t\t\t \t\t\t 73.5 \t\t\t \t\t\t \t\t\t (2.2) \t\t\t \t\t\t \t\t\t 71.3 \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted EPS 3,4 \t\t\t \t\t\t \t\t\t 8.5p \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 8.5p \t\t\t \t\t\t \t\t\t 8.1p \t\t\t \t\t\t \t\t\t (0.3)p \t\t\t \t\t\t \t\t\t 7.8p \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Dividend per share \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1.7p \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1.5p \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted net debt/(cash) 5 \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 0.2 \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (77.1) \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t H1 2025 (£m) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t H1 2024 (£m) \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Statutory \t\t\t \t\t\t \t\t\t Cont. \t\t\t \t\t\t \t\t\t Disc. \t\t\t \t\t\t \t\t\t Total \t\t\t \t\t\t \t\t\t Cont. \t\t\t \t\t\t \t\t\t Disc. \t\t\t \t\t\t \t\t\t Total \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Revenue \t\t\t \t\t\t \t\t\t 2,344.1 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 2,344.1 \t\t\t \t\t\t \t\t\t 2,207.0 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 2,207.0 \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Operating profit/(loss) \t\t\t \t\t\t \t\t\t 100.3 \t\t\t \t\t\t \t\t\t 5.9 \t\t\t \t\t\t \t\t\t 106.2 \t\t\t \t\t\t \t\t\t (41.4) \t\t\t \t\t\t \t\t\t 0.1 \t\t\t \t\t\t \t\t\t (41.3) \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Profit/(loss) before tax 6 \t\t\t \t\t\t \t\t\t 70.3 \t\t\t \t\t\t \t\t\t 5.8 \t\t\t \t\t\t \t\t\t 76.1 \t\t\t \t\t\t \t\t\t (68.5) \t\t\t \t\t\t \t\t\t 0.1 \t\t\t \t\t\t \t\t\t (68.4) \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t EPS 4 \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 9.2p \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (7.9)p \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Net debt \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 977.1 \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,144.6 \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t - Bonds, bank and other debt net of (cash) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (274.7) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (384.4) \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t - IFRS 16 lease liabilities \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,251.8 \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,529.0 \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t ’Cont.' refers to the Continuing operations comprising First Bus, First Rail, and Group items. 'Disc.' refers to discontinued operations, being First Student, First Transit and Greyhound US. Key developments First Bus: \t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Underlying 7 passenger volumes increased 4% vs. H1 2024, with operational improvements driving growth in both volumes and profitability \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Total of 83m service miles operated in H1 2025 (H1 2024: 80m on an underlying basis) \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Total revenue increased to £513.7m (H1 2024: £504.9m) despite a c.£12.4m reduction in government funding; underlying passenger revenue growth of 10% \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Adjacent Services revenue increased to £125.7m from £116.2m in H1 2024 due to contract wins and extensions and contribution of Ensignbus and York Pullman \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Adjusted operating margin increased to 8.0% (H1 2024: 7.1%); on track for 10% in H2 2025 \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Further progress in electrification of fleet and infrastructure: \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t c.15% of the fleet is now zero emission, with three depots in England now fully electrified and a further five across the UK substantially electrified \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t First Bus placed the UK’s largest single repower order with Wrightbus for 32 diesel to electric bus conversions, scheduled for delivery in FY 2025 \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Post period end acquisitions of Anderson Travel and Lakeside Group in England and new contract with Flixbus representing additional combined annual revenues of c.£25m \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t First Rail: \t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t 132.3m passenger journeys in H1 2025 (H1 2024: 123.4m); DfT TOCs: 130.9m and open access 1.4m \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t DfT TOCs financial performance in line with expectations; H1 2024 was positively affected by higher than accrued final variable fee payments for FY 2023. Focus remains on operational delivery for passengers across all our services \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Open access operations revenue growth of £5.6m (12%) in line with expectations \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t First London Cableway successfully took over the operation of the London Cable Car on behalf of TfL in June (c.£60m revenue anticipated over the eight-year contract) \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Acquisition of track access rights for new rail open access service between London and Stirling \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Applications for the extension of Hull Trains to Sheffield and Lumo to Glasgow have been submitted, as well as for a new service to run between Rochdale and London; consultations are progressing, supported by detailed performance and business case analysis \t\t\t \t\t \t Corporate: \t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Appointment of Lena Wilson as Board Chair effective from 1 February 2025 \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t FirstGroup upgraded to MSCI’s highest possible ESG ranking of AAA in July 2024 \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Remainder of the Group’s September 2024 6.875% bonds repurchased \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Legacy US Greyhound pension obligations now fully discharged; one-off net settlement gain of £5.5m after related costs recognised in H1 2025 \t\t\t \t\t \t Outlook \t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t Current trading and the Group’s outlook for FY 2025 is slightly ahead of our expectations as set out at the full year results in June: \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t First Bus: we expect to make further progress in H2 2025, reaching a 10% adjusted operating margin for the half, driven by operational improvements, efficiency initiatives and the newer fleet \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t First Rail: the division’s financial performance in H2 2025 is anticipated to be slightly ahead of our prior expectations, reflecting growth in open access and a normal level of variable fee awards in the DfT TOCs (approximately two thirds of the maximum available) \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t Marginal adjusted net debt position expected at the end of FY 2025, assuming net cash capex of £125m in First Bus and after the deployment of announced growth capital and progression of the £50m buyback programme \t\t\t \t\t \t\t \t\t\t \t\t\t • \t\t\t \t\t\t \t\t\t The Group expects to maintain its adjusted EPS in FY 2026 as we grow earnings in First Bus and open access rail \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t Commenting, Chief Executive Officer Graham Sutherland said: “We have reported a robust set of results for the first half of our 2025 financial year and are on course to make further progress in the second half, reinforcing our strong track record for delivery. As a major bus and rail operator in the UK we have a critical role to play in supporting the country’s wider economic, social and environmental goals. We will continue to take a proactive approach, demonstrating our strengths as an experienced, trusted partner in public transport.” Results presentation and webcast A presentation and webcast for investors and analysts will be held at 09:00 (GMT) today in London. To register to join in person or to request the webcast details, please email [email protected]. To access the presentation to be discussed on the webcast, together with a pdf copy of this announcement, go to www.firstgroupplc.com/investors. A playback facility will also be available there in due course. \t \t\t \t\t\t \t\t\t Contacts at FirstGroup: \t\t\t \t\t\t \t\t\t Contacts at Brunswick Group: \t\t\t \t\t \t\t \t\t\t \t\t\t Marianna Bowes, Head of Investor Relations \t\t\t Stuart Butchers, Head of Corporate Communications \t\t\t [email protected] \t\t\t Tel: +44 (0) 20 7725 3354 \t\t\t \t\t\t \t\t\t Andrew Porter / Simone Selzer \t\t\t Tel: +44 (0) 20 7404 5959 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Contacts at Panmure Liberum: \t\t\t \t\t\t \t\t\t Contacts at RBC Capital Markets: \t\t\t \t\t \t\t \t\t\t \t\t\t Nicholas How / John Fishley \t\t\t Tel: +44 (0) 20 3100 2000 \t\t\t \t\t\t \t\t\t James Agnew / Jack Wood \t\t\t Tel: +44 (0) 20 7653 4000 \t\t\t \t\t \t Notes 1 ‘Adjusted revenue’ is defined as revenue excluding that element of DfT TOC revenue, and related intercompany eliminations, where the Group takes substantially no revenue risk. The Adjusted revenue measure includes management and performance fee income earned by the Group from its DfT TOC contracts. 2 ‘Adjusted operating profit/(loss)’ and ‘Adjusted profit/(loss) before tax’ are before adjusting items as set out in note 3 to the financial statements 3 ‘Adjusted earnings’ are shown before net adjusting items and excludes IFRS 16 impacts in First Rail management fee operations. For definitions of alternative performance measures and other key terms, see the definitions section on pages 20-21. 4 ‘ Adjusted EPS’ and EPS based on weighted average number of shares in the period of 608.5m (H1 2024: 697.7m) reflecting the current year and prior year share buybacks. 5 ‘ Adjusted net debt/(cash)' is bonds, bank and other debt net of free cash (i.e. excludes IFRS 16 lease liabilities and ring-fenced cash). 6 ‘ H1 2024 statutory operating loss of £(41.4)m included predominantly non-cash charges of £142.3m relating to the Group’s termination of its participation in two Local Government Pension Schemes during the year with an offsetting £160.4m gain in the Condensed Consolidated Statement of Comprehensive Income. 7 ‘Underlying’ adjusts for certain items which distort period-on-period trends in our commercial bus business, described on page 21 Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR 6 Annex 1R: 1.1. About FirstGroup FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public transport services. With £4.7 billion in revenue and around 30,000 employees, we transported almost 2m passengers a day in FY 2024. We create solutions that reduce complexity, making travel smoother and life easier. Our businesses are at the heart of our communities and the essential services we provide are critical to delivering wider economic, social and environmental goals. Each of our divisions is a leader in its field: First Bus is one of the largest regional bus operators in the UK, serving more than 20% of the population in the UK with a fleet of around c.4,800 buses, and carrying more than a million passengers a day. First Rail is one of the UK’s largest rail operators, with many years of experience running long-distance, commuter, regional and sleeper rail services. We operate a fleet of c.3,700 locomotives and rail carriages through three DfT contracted train operating companies: WCP (incorporating Avanti West Coast and West Coast Partnership Development), GWR and SWR) and two open access routes (Hull Trains and Lumo). We are formally committed to operating a zero emission First Bus fleet by 2035, and First Rail will help support the UK Government’s goal to remove all diesel-only trains from service by 2040. During FY 2024 FirstGroup was named as one of the world’s cleanest 200 public companies for the fifth consecutive year and achieved Industry Top-Rated status for the first time with Sustainalytics. We provide easy and convenient mobility, improving quality of life by connecting people and communities. Visit our website at www.firstgroupplc.com and follow us @firstgroupplc on X. CEO review Introduction I am pleased to report a robust performance during the first half of our 2025 financial year. We are reporting Group Adjusted operating profit of £100.8m compared to £100.6m in H1 2024 which was positively affected by an extra week of trading and higher than accrued final variable fee payments for FY 2023 in our DfT TOCs (a c.£13m uplift). Our Adjusted Earnings per share has increased to 8.5p from 8.1p in the prior year, reflecting the benefit of the buyback programme that was completed in August. Focus on operational delivery and modal shift Operational excellence and driving modal shift from car and air travel to bus and train are key to our strategy. We strive to make use of our leading positions and expertise to ensure the best possible customer experience, to deliver reliable, cost efficient services, drive demand, add capacity, win key contracts and grow our businesses. In First Bus, we are benefiting from improved operational performance, efficiency initiatives and our newer electric fleet which have resulted in volume growth and lower costs. The division has again grown its revenues and profit, leaving it on track to achieve a 10% adjusted operating margin in the second half. Passenger volumes have seen some further recovery despite the seasonally quiet summer period. On an underlying basis 7 , mileage increased by 4% compared to H1 2024, with revenue per mile improving by 5%, to £6.19 in H1 2025. First Bus's Adjacent Services revenues further increased due to contract wins and extensions and the contribution of Ensignbus and York Pullman. After the period end, we completed the acquisition of Anderson Travel and Lakeside Group, further growing our Adjacent Services portfolio and allowing us to enter new B2B and B2C coach services markets. We have also recently entered into a new five-year contract with Flix Bus to operate eight new or expanded coach routes. The acquisitions we have made in First Bus in the last few years are anticipated to contribute combined annual revenues of c.£100m and EBIT of c.£13m on a current run rate basis. In First Rail we reported a 7% increase in passenger journeys during the period, with a total of just over 132m journeys (H1 2024: 123m), 131m in the DfT TOCs and 1.4m in Hull Trains and Lumo, our successful open access operations. Financial performance has been in line with our expectations and our focus remains firmly on operational delivery for our customers and partners. We successfully took over the operation of the London Cable Car contract at the end of June following several months of mobilisation activity during which we have built a positive working relationship with TfL. We look forward to working with TfL to enhance the customer proposition and place the service at the heart of its local community. Leading in environmental and social sustainability We were very pleased to announce in July that FirstGroup has achieved the highest possible ESG rating by MSCI, AAA, a further endorsement of our sustainability credentials. During H1 2025, we have continued to make good progress in our First Bus decarbonisation programme. Following successful applications with our local authority partners to secure £16m through the UK Government’s ZEBRA 2 co-funding scheme earlier this year, we have been working hard to prepare our depots and infrastructure for the delivery of electric buses in the coming months. We now have eight fully or substantially electric depots across the UK and c.15% of our bus fleet is zero emission. We are also preparing to publish our first climate transition plan, in alignment with the Transition Plan Taskforce (TPT) Disclosure Framework, to further enhance transparency and accountability in our climate reporting practices. The plan, which will be published in early 2025, will outline our comprehensive strategy and pathway to achieve our climate transition goals, detailing our approach to reducing greenhouse gas emissions, managing climate-related risks and contributing to an economy-wide transition. A period of change in UK bus and rail As a major public transport operator in the UK we have a critical role to play in the delivery of the country’s wider economic, social and environmental goals. Following the UK general election in July our teams have been engaging with the new government. We will continue to take a proactive approach, demonstrating our strengths as an experienced, trusted partner for the delivery of public transport services. The rail and bus industries in the UK are set to see considerable change over the next few years, with the National Rail Contracts set to move to public ownership and a number of regions outside London planning to adopt the franchising model in bus. In rail, we have been one of the largest operators for more than 25 years, during which we have worked successfully with a wide range of partners under various contract types and delivered a number of significant rail infrastructure and fleet upgrade projects. Companies such as ours bring innovation, enhanced service delivery, private investment and focus on cost control to an industry that needs it – our DfT TOCs have saved more than £300m for the DfT in their annual business plans over the last three years. Open access has been a hugely successful aspect of rail policy, providing services to under-served communities, supporting local communities and suppliers, creating jobs and additional capacity on core routes which help drive modal shift away from more carbon-intensive modes of transport. It has great potential for helping to drive future social mobility and economic growth; any future rail policy must fully embrace open access. We know that growth and innovation are key for the future of the railway and are committed to working with our partners to provide competitive, sustainable and improved services for all passengers and communities. Furthermore, if the applications we have submitted to grow our open access portfolio are successful, the new services will not only benefit under-served communities and create operational jobs, they will also support the wider value chain through train manufacturing and associated jobs in the UK. Likewise, as one of the largest regional bus companies in the UK, First Bus is the leading operator in the majority of its local areas, carrying more than a million passengers a day. First Bus is playing a leading role in the transformation of the bus sector, leveraging its proven capability and expertise to work in close partnership with national, regional and local governments, in every regulatory environment, to ensure the best outcomes for customers. We believe this can be achieved with a focus on bus priority and congestion tackling measures, ‘bus first’ planning decisions, targeted fare initiatives, improved reliability, enhanced facilities and accessibility for customers, attracting workers to the bus sector and making bus a leading visible indicator in our green transition. Significant scope to grow and diversify our portfolio With our cash generative businesses and considerable balance sheet capacity we are able to take advantage of value accretive opportunities to grow and diversify our portfolio and ensure we increase our profitability and remain a profitable, resilient business. When assessing any opportunity for the Group, we have a disciplined capital allocation policy and a strict set of criteria. We will always seek to ensure that the opportunities we explore are complementary to our existing portfolio and the Group’s strategy, thoroughly assessed for risks and opportunities and operated within a well-understood contractual, political and regulatory environment with an appropriate balance of risk and reward. In First Rail, we are focused on growing in open access, identifying where we can scale our Additional Services businesses, bidding for new contracts and identifying new open access opportunities in the UK, as well as monitoring open access opportunities in Europe as the market continues to liberalise. In August we acquired Grand Union Trains WCML Holdings Limited, which owns the track access rights granted by the Office of Rail and Road (‘ORR’) to run a new open access rail service on the West Coast Mainline from London Euston to Stirling. The current track access agreement runs from May 2025 for a period of five years and includes four return services a day between London Euston and Stirling, and a fifth return service between Euston and Preston. The new service will call at a number of intermediate stations in England and Scotland, including Whifflet, Greenfaulds and Larbert which will have their first direct services to London. We look forward to providing further detail including on rolling stock and an operational start date in due course. Earlier this year we submitted applications to the Office of Rail and Road (‘ORR’) for a new Hull Trains London-Worksop-Sheffield service and a new Lumo Rochdale-London service, as well as for the extension of a number of Lumo’s daily services to and from Glasgow and for additional paths on both Lumo and Hull Trains. Positive discussions on these applications continue with the ORR and Network Rail, supported by detailed business case and performance modelling conducted by our internal teams and third-party experts. We expect to start being notified of updates and decisions in the first half of next year. In addition to growing in open access we are bidding for new contracts, including TfL’s upcoming Elizabeth Line contract, for which we submitted a joint bid in July 2024, ahead of the anticipated mobilisation start date in May 2025. The First Rail Consultancy team have also participated in a high-quality consortium bid for the consultancy services relating to the design, build and operation of a new high frequency electrified intercity rail service, a major infrastructure rail project between Quebec City and Toronto. In H1 2025 our First Rail Additional Services businesses, First Customer Contact, Mistral Data and First Rail Consultancy generated revenues of £20.0m (H1 2024: £18.2m). We are looking at ways to scale these businesses as we believe that private sector ancillary services suppliers will continue to be vital to the success of the rail industry, bringing experience, expertise and benefits to the sector. In First Bus, we have identified a clear plan to navigate the market transition, to grow and diversify our portfolio and steadily grow our earnings. To do this, we intend to win our fair share of the franchise market across the UK, develop our existing commercial bus business, grow our Adjacent Services earnings and market share, and we will continue to actively evaluate a pipeline of inorganic growth opportunities in existing and new areas across the UK. Coupled with this, we will make use of our property portfolio and decarbonisation credentials to drive innovation, leverage electrification efficiencies and generate new revenue streams in the energy sector. With regards to franchising, a number of Mayoral authorities have indicated that franchising is their preferred future option, representing an opportunity to gain market share by bidding for contracts in areas where we currently operate and entering new regions. Our mission is for more people to use the bus and we will participate in future franchise bids and partnership opportunities, positioning First Bus as the partner of choice, capable of consistent and competitive service delivery. In Adjacent Services, we have built an experienced business development team and are leveraging our operational strengths and decarbonisation capabilities to extend and win new contracts. We are also benefiting from the contribution of Ensignbus and York Pullman and continuing to grow our market share and geographical footprint, including through the recent acquisitions and contract wins mentioned above. We already have a strong regional footprint and a credible market position, but there is considerable scope for us to grow in this market, specifically in airport services, workplace shuttles and B2B and B2C coach services, which offer stable earnings with attractive margins. Board changes At our AGM in July, David Martin announced his intention to retire from the Board. I thank David for his contribution to the Group and the strategic progress that he has overseen. We were pleased to announce in September that Lena Wilson CBE will be joining the Board as Chair on 1 February 2025. Lena is a highly experienced director and Chair, currently a Non-Executive Director at NatWest Group plc, and has held senior and Board roles at a number of listed and private companies including Scottish Power Renewables Limited, Intertek Group plc, AGS Airports Limited. Lena was also Chief Executive of Scottish Enterprise from 2009 to 2017 and prior to that, a Senior Investment Advisor to The World Bank in Washington DC. We are delighted that Lena will be joining us to chair our Board, bringing substantial experience from both the public and private sectors combined with a strong track-record as a Non-Executive Director. Corporate activity and capital allocation Key corporate activity during the period has included the repurchasing the remainder of the Group’s 2024 bonds and we have now fully discharged the Group’s legacy Greyhound pension obligations which has resulted in a one-off gain of £5.5m in the profit and loss statement in H1 2025. We have maintained our strong balance sheet, reporting adjusted net debt of £0.2m at period end, having invested in the electrification of our bus fleet and infrastructure and returned c.£41m to shareholders via our buyback programme. In line with our disciplined capital policy and the Group’s continued strong financial performance, the Board has announced an additional £50m on market share buyback programme and declared an interim dividend of 1.7p per share (H1 2024: 1.5p per share). This will result in a dividend payment of c.£10m to be paid on 31 December 2024 to shareholders on the register at 29 November 2024. Outlook Current trading and the Group’s outlook for FY 2025 is slightly ahead of the outlook set out in the full year results in June 2024. We expect to make further progress in First Bus, reaching a 10% adjusted operating margin in the second half. Financial performance in First Rail is anticipated to be slightly ahead of our prior expectations, reflecting growth achieved in open access and a normal level of variable fee awards in the DfT TOCs (approximately two thirds of the maximum available). Positive free cash generation, after c.£125m of net cash capital expenditure in First Bus, the deployment of our announced growth capital and progression of the £50m buyback programme, is expected to result in a marginal net debt position at the end of FY 2025. We anticipate that we will maintain our adjusted EPS in FY 2026 as we grow earnings from First Bus and open access rail. Furthermore, the Group has a strong pipeline of organic and inorganic growth opportunities, and the Board remains committed to returning surplus cash to shareholders. In First Bus we are well positioned to manage through the measures announced in the recent budget that will affect the bus sector. Our team has the experience to manage both the transition from the £2 fare cap to the new £3 cap in January 2025 and the impact of the increases in employers’ national insurance, through the implementation of a combination of yield and operational efficiencies. We welcome the announcement of continued government support for the bus sector, with an extension to the Bus Service Improvement Plan (‘BSIP’) and Bus Service Operators Grant (‘BSOG’) funding packages, and the £200m increase in City Region Sustainable Transport Settlements (‘CRSTS’) funding, as well as support for local transport beyond the city regions. In First Rail, the Government’s announced policy is to bring the National Rail Contracts into public ownership at the earliest possible opportunity. As the contracts transition, we anticipate a cash inflow of c.£80m from the DfT TOCs, including any reorganisation costs the Group may incur, over a three-year period from April 2025 with cash received from the management fees a year in arrears. This cash receipt includes the earnings from the division’s Additional Services businesses that are expected to continue supporting the DfT TOCs after their contracts end, as required under the National Rail Contracts. Looking further ahead, First Bus and our First Rail open access businesses are expected to continue to grow from their existing strong bases. They are also expected to remain cash generative following a period of significant investment in the First Bus fleet and open access rail is capital light, with rolling stock funded through operating leases in line with track access agreements. Conclusion H1 2025 has been another strong period of delivery for the Group. We still have more to do, and as we enter a period of transition, we will continue to work with government and all our partners to make use of our extensive experience and expertise to deliver the best possible services and encourage more people to use bus and rail. There is no doubt that our businesses will change over the next few years, but our core strategy around operational excellence, encouraging modal shift and leading in environmental and social sustainability will underpin everything that we do. Furthermore, we have considerable growth opportunities which puts FirstGroup in a strong position. We will continue to invest, with strict discipline, to grow and diversify our portfolio and maintain our earnings trajectory as well as remaining focused on delivering potential further capital returns to shareholders. Graham Sutherland Chief Executive Officer 14 November 2024 Business Review First Bus \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t £m \t\t\t \t\t\t \t\t\t £m \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t H1 2025 \t\t\t \t\t\t \t\t\t H1 2024 \t\t\t \t\t\t \t\t\t Change \t\t\t \t\t \t\t \t\t\t \t\t\t Revenue \t\t\t \t\t\t \t\t\t 513.7 \t\t\t \t\t\t \t\t\t 504.9 \t\t\t \t\t\t \t\t\t 8.8 \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted operating profit \t\t\t \t\t\t \t\t\t 41.1 \t\t\t \t\t\t \t\t\t 36.0 \t\t\t \t\t\t \t\t\t 5.1 \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted operating margin \t\t\t \t\t\t \t\t\t 8.0% \t\t\t \t\t\t \t\t\t 7.1% \t\t\t \t\t\t \t\t\t 90bps \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted EBITDA \t\t\t \t\t\t \t\t\t 72.7 \t\t\t \t\t\t \t\t\t 68.8 \t\t\t \t\t\t \t\t\t 3.9 \t\t\t \t\t \t\t \t\t\t \t\t\t Adjacent Services revenue \t\t\t \t\t\t \t\t\t 125.7 \t\t\t \t\t\t \t\t\t 116.2 \t\t\t \t\t\t \t\t\t 9.5 \t\t\t \t\t \t\t \t\t\t \t\t\t Passenger volumes (m) \t\t\t \t\t\t \t\t\t 204 \t\t\t \t\t\t \t\t\t 210 \t\t\t \t\t\t \t\t\t (3)% \t\t\t \t\t \t\t \t\t\t \t\t\t Operational mileage (m) \t\t\t \t\t\t \t\t\t 83 \t\t\t \t\t\t \t\t\t 84 \t\t\t \t\t\t \t\t\t (1)% \t\t\t \t\t \t\t \t\t\t \t\t\t Revenue per mile (£) \t\t\t \t\t\t \t\t\t 6.19 \t\t\t \t\t\t \t\t\t 6.01 \t\t\t \t\t\t \t\t\t 0.18 \t\t\t \t\t \t\t \t\t\t \t\t\t Net operating assets \t\t\t \t\t\t \t\t\t 658.3 \t\t\t \t\t\t \t\t\t 512.4 \t\t\t \t\t\t \t\t\t 145.9 \t\t\t \t\t \t\t \t\t\t \t\t\t Net capital expenditure \t\t\t \t\t\t \t\t\t 52.4 \t\t\t \t\t\t \t\t\t 88.7 \t\t\t \t\t\t \t\t\t (36.3) \t\t\t \t\t \t\t \t\t\t \t\t\t Return on Capital Employed 1 \t\t\t \t\t\t \t\t\t 11.4% \t\t\t \t\t\t \t\t\t 11.3% \t\t\t \t\t\t \t\t\t 10bps \t\t\t \t\t \t 1 Return on capital employed is a measure of capital efficiency and is calculated by dividing adjusted operating profit after tax on a trailing 12-months basis using a normalised tax rate basis of 25% by average period-end assets and liabilities excluding debt items. First Bus generated revenue of £513.7m in H1 2025 compared to £504.9m in H1 2024, which had an extra week of trading and included the operation of the Oldham depot in Manchester, offsetting a £12.4m reduction in government funding. Total passenger revenue increased to £385.8m (H1 2024: £377.1m), with revenue per mile increasing from £6.01 in the prior period, to £6.19. Excluding the extra week in H1 2024 and the transfer of First Bus operations in Oldham to TfGM, underlying passenger volumes increased 4% compared with the prior period, with total mileage also up 4%. Passenger volumes have continued to be underpinned by our data-led service improvements, the free travel for under-22s scheme in Scotland, and the £2 fare cap in England that has grown patronage, mostly in markets with longer journey fares that were typically much more expensive previously. Under the Scottish Government’s under-22s scheme, operators are reimbursed a proportion of the cost of a full adult fare. Under the £2 fare cap scheme in England, operators agree a reimbursement schedule in advance with the DfT based on the projected cost to the operator for charging a flat £2 fare for journeys that would otherwise have cost more. The £2 fare cap in England is due to be replaced by a £3 fare cap from 1 January to 31 December 2025. Whilst the terms and conditions have not yet been confirmed, we believe that the £3 cap will still protect the majority of our customers from the largest increases back to uncapped fares, and in turn, protect the passenger volume uplifts we have seen on these routes. We are currently reviewing our pricing strategy ahead of the introduction of the £3 cap. The extra week of trading in H1 2024 added c.£1.4m of adjusted operating profit. In H1 2025 adjusted operating profit increased to £41.1m (H1 2024: £36.0m), an adjusted operating profit margin of 8.0% (H1 2024: 7.1%), leaving the division on track to achieve a 10% margin in H2 2025. The return on capital employed increased to 11.4% during the period (H1 2024: 11.3%). This reflects the growth in the division’s adjusted operating profit, substantially offset by the accelerated investment in the electrification of our fleet and infrastructure that is anticipated to increase future profitability due to lower operating costs and the benefits of adjacent revenue streams. Improved operational delivery As a result of the actions we have taken, including the use of our industry-leading data tools, we are delivering better quality mileage, aligning services to demand, implementing smarter fares and driving operational and cost efficiencies throughout the division. During H1 2025 we made use of our granular data to implement a number of fare increases. We have also continued to invest in our workforce to provide enhanced benefits and learning opportunities and attract more people to work at First Bus. In H1 2025 this included a ground-breaking new learning agreement with our trade union partner, Unite the Union. Six new learning centre hubs will be created, offering all frontline colleagues a dedicated facility that puts continual learning opportunities outside of their day-to-day skillset at the forefront, equipping them with new skills to drive forward their careers and better support First Bus customers. Both vocational and non-vocational modules will be available to colleagues, alongside support from a trained and full-time Trade Union Learning Representative. We are very proud of this important initiative which builds on the strong foundations of an ongoing education partnership with Unite the Union that has spanned over two decades. Thanks to our enhanced driver recruitment and training programmes, we now have more drivers (a net increase of 75 drivers in the period vs. the prior year) which contributed to us running 98.4% of our scheduled mileage (H1 2024: 98.0%). We are also benefiting from our newer electric fleet, with an average fleet age in H1 2025 of 9.0 years, down from 10.1 years in FY 2022. Inflationary pressures continued during the period. Costs increased due to inflation by c.3%, principally in wages where there was a 5% average increase in driver pay awards, much of which is carried over from agreements in the previous financial year; we have now settled over 80% of our pay awards for FY 2025. Pricing changes of c.£21m offset cost inflation during H1 2025. We have fuel and electricity hedging programmes in place to mitigate in-year cost inflation and overall volatility of fuel and energy costs and these programmes continue to evolve as we transition the First Bus fleet to zero emission. Growing our share of the Adjacent Services market We have built an experienced business development team and are successfully leveraging our operational strengths, infrastructure and decarbonisation credentials to extend existing and win new contracts. This allows us to maximise commercial return through longer-term, higher value contracts and grow both our market share and geographical footprint. Revenue from Adjacent Services increased to £125.7m in H1 2025 (H1 2024: £116.2m). As well as benefiting from the contribution of Ensignbus and York Pullman, we have continued to win new contracts and successfully negotiate extensions to existing contracts. These have included contracts within our workplace shuttle services for a number of high-profile brands and Park & Ride contracts in Taunton, Portsmouth and Norwich. Earlier this month we were also pleased to announce a new five-year contract with FlixBus to operate eight coach routes across the UK spanning from Penzance to Newcastle. As part of the Group’s investment in the partnership First Bus is purchasing 21 express coaches, with plans to recruit 65 new drivers across seven First Bus depots in three regions. The services are due to be launched from April to July 2025, with First Bus providing staff, all vehicle-related requirements and service delivery and FlixBus providing the platform for passengers. The coaches will be branded in the full FlixBus livery, including uniform for the drivers. We are also growing our business through strategic bolt-on acquisitions which in recent weeks has included Anderson Travel and Lakeside Group. These are all well established, profitable businesses that will grow our share of the B2B and B2C coach market and allow us to enter new markets. The acquisitions we have made in First Bus in the last few years will contribute combined annual revenues of c.£100m and EBIT of c.£13m. We have a strong regional footprint and a credible market position in adjacent services, but there is considerable scope for us to grow in this market, specifically in airport services, workplace shuttles and B2B and B2C coach services, which offer stable earnings with attractive margins. Franchising and partnerships A number of Mayoral authorities outside London have indicated that franchising is their preferred future option, including in some areas where they currently operate, and some where we do not. We continue to build relationships and have a strong commercial team ready to take advantage of franchising opportunities as they develop, bidding for contracts in areas where we currently operate, and to enter new regions. We have experience of both the partnership and franchise models, as the key operator in the successful Enhanced Partnership Scheme in Leicester and through our Rochdale franchise contracts in Manchester. Our mission is for more people to use the bus, and we will participate in future franchise bids and partnership opportunities, positioning First Bus as the partner of choice, capable of consistent and competitive service delivery. We will continue to adapt our business to deliver great value, to shape networks to suit where and when people want to travel, to serve communities and grow local economies in a sustainable way. Regardless of the model, close partnerships with local government stakeholders are essential for the thriving local bus networks we all want to see, and we are committed to working with our partners locally and nationally to achieve this. Decarbonisation Earlier this year we announced that we had worked successfully with our local authority partners to secure £16m through the UK Government’s ZEBRA 2 co-funding scheme to support bus and fleet decarbonisation across four of our regions. We have made good progress in preparing our depots for the delivery of electric buses. In August 2024 we were pleased to announce that three of our depots, in Leicester, York and Norwich, had been officially verified as net zero emission depots, some of the first in the country to achieve this milestone. The depots have built on the progress of their fully electric commercial bus fleets by investing in the necessary additional carbon reduction requirements to claim net zero status. We have five further depots across the UK substantially electrified, and we have continued to grow our fleet of electric buses to over 650, c.15% of our fleet. We have more than 650 charging outlets and continue with our successful third-party charging arrangements, including with DPD, Openreach and various public services providers across multiple depots in England and Scotland. We also have a purpose-built hub at our Summercourt depot in Cornwall, providing direct access for the public to eight rapid charging outlets. In addition, we have recently announced a new agreement with Centrica for their drivers to use the chargers at our Leicester depot and have signed our first agreement with a customer operating an eHGV fleet and anticipate this being an area of focus going forwards. Another significant milestone for First Bus has been our entry into the ‘repowers’ market. A repowered bus is a mid-life diesel or hybrid bus that has been converted to run entirely on electricity. Along with all the regular benefits of electric buses such as reduced emissions and lower operating costs, repowered vehicles are cheaper, can extend the lifespan of buses and avoid the emissions of manufacturing new vehicles. In 2022 we partnered with Equipmake to upgrade twelve electric buses in York and more recently, we placed the UK’s largest single repower order with Wrightbus for 32 electric conversions, scheduled for delivery in H2 2025. These orders are an important, incremental component of our decarbonisation strategy and if successful, we will consider opportunities to place further orders in the future. In addition to our recent orders for repowers, in H1 2025 we invested £1m into KleanDrive, a leader in the electric conversion of heavy vehicles, such as buses, coaches and trucks. KleanDrive’s modular electric drivetrains combines next-generation technology from top tier suppliers with deep engineering expertise to provide a flexible, bespoke solution to quickly repower heavy duty vehicles to reduce emissions, extend vehicle life and materially lower costs. This is our first venture investment and is consistent with our focus on accessing new and innovative solutions in decarbonisation through targeted investments. We continue to play a leading role in bus and infrastructure electrification both through our programme and through sharing our learnings with other operators and local authorities, and we are now able to leverage our decarbonisation credentials when we bid for new contracts. Furthermore, thanks to the progress we have made to date, we can now see the benefits of operating fully electric bus depots and firmly believe that the electrification of our fleet and infrastructure will further transform our business and provide a number of value accretive adjacent revenue streams. It will allow us to standardise and reduce the size of our fleet to drive efficiency and lower engineering costs whilst delivering the same mileage, and by making use of smart charging software we will be able to optimise our energy use, increase battery efficiency and potentially extend battery life. Looking ahead We expect to make further progress in H2 2025, reaching a 10% adjusted operating margin, driven by operational improvements, efficiency initiatives and the division’s newer fleet. In First Bus we are well positioned to manage through the measures announced in the recent budget that will affect the bus sector. Our team has the experience to manage both the transition from the £2 fare cap to the new £3 cap in January 2025 and the impact of the increases in employers’ national insurance, through the implementation of a combination of yield and operational efficiencies. We welcome the announcement of continued government support for the bus sector, with an extension to the Bus Service Improvement Plan (‘BSIP’) and Bus Service Operators Grant (‘BSOG’) funding packages, and the £200m increase in City Region Sustainable Transport Settlements (‘CRSTS’) funding, as well as support for local transport beyond the city regions. In FY 2026 we anticipate growth in adjusted operating profit. We expect capital expenditure in the division will be lower than in FY 2025, reflecting depot build and continued electrification infrastructure investment, offset by a lower level of fleet capital expenditure following a period of higher capex which has resulted in the division lowering its average fleet age to c.9 years (from 10.1 years in FY 2022). Looking further ahead, we will navigate the market transition as the Government introduces new policies, grow and diversify our portfolio and steadily grow our earnings. To do this, we intend to win our fair share of the franchise market across the UK, develop our existing commercial bus business, grow our Adjacent Services earnings and market share, and we will continue to actively evaluate a pipeline of inorganic growth opportunities in existing and new areas across the UK. We will also make use of our property portfolio and decarbonisation credentials to drive innovation, leverage electrification efficiencies and generate energy-related revenue streams. Underpinning this, we firmly believe that government policy, favourable demographics and environmental and societal trends will support sustainable growth in the UK bus sector going forward. First Rail \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t £m \t\t\t \t\t\t \t\t\t £m \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t H1 2025 \t\t\t \t\t\t \t\t\t H1 2024 \t\t\t \t\t\t \t\t\t Change \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted revenue from DfT TOCs 1 \t\t\t \t\t\t \t\t\t 23.7 \t\t\t \t\t\t \t\t\t 34.7 \t\t\t \t\t\t \t\t\t (11.0) \t\t\t \t\t \t\t \t\t\t \t\t\t Revenue from open access and additional services 2 \t\t\t \t\t\t \t\t\t 112.3 \t\t\t \t\t\t \t\t\t 100.0 \t\t\t \t\t\t \t\t\t +12.3 \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail Adjusted Revenue \t\t\t \t\t\t \t\t\t 136.0 \t\t\t \t\t\t \t\t\t 134.7 \t\t\t \t\t\t \t\t\t +1.3 \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted operating profit from DfT TOCs \t\t\t \t\t\t \t\t\t 44.1 \t\t\t \t\t\t \t\t\t 54.9 \t\t\t \t\t\t \t\t\t (10.8) \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted operating profit from open access and additional services \t\t\t \t\t\t \t\t\t 23.8 \t\t\t \t\t\t \t\t\t 22.1 \t\t\t \t\t\t \t\t\t +1.7 \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail adjusted operating profit \t\t\t \t\t\t \t\t\t 67.9 \t\t\t \t\t\t \t\t\t 77.0 \t\t\t \t\t\t \t\t\t (9.1) \t\t\t \t\t \t\t \t\t\t \t\t\t Passenger journeys (m) – DfT TOCs 3 \t\t\t \t\t\t \t\t\t 130.9 \t\t\t \t\t\t \t\t\t 122.1 \t\t\t \t\t\t \t\t\t +8.8 \t\t\t \t\t \t\t \t\t\t \t\t\t Passenger journeys (m) – open access operations \t\t\t \t\t\t \t\t\t 1.4 \t\t\t \t\t\t \t\t\t 1.3 \t\t\t \t\t\t \t\t\t +0.1 \t\t\t \t\t \t\t \t\t\t \t\t\t Passenger journeys (m) – Total \t\t\t \t\t\t \t\t\t 132.3 \t\t\t \t\t\t \t\t\t 123.4 \t\t\t \t\t\t \t\t\t +8.9 \t\t\t \t\t \t 1 ‘Adjusted revenue’ is revenue excluding that element of DfT TOC revenue, and related intercompany eliminations, where the Group takes substantially no revenue risk. The Adjusted revenue measure includes management and performance fee income earned by the Group from its DfT TOC contracts 2 Includes intra divisional eliminations 3 Totals exclude TPE: H1 2024: 3.3m passenger journeys The First Rail division reported total adjusted revenue of £136.0m in H1 2024 (H1 2024: £134.7m). The division’s open access operations contributed £51.9m in revenue for the period, up from £46.3m in the prior year. The division’s Additional Services businesses delivered revenue of £60.4m (H1 2024: £54.0) and adjusted operating profit of £5.7m (H1 2024: £6.4m). The DfT TOCs reported adjusted operating profit for the period of £44.1m (H1 2024: £54.9m). As previously reported, during H1 2024 the final variable fee payments due for the DfT TOCs for the FY 2023 fiscal year were agreed with the DfT at a rate ahead of the amounts accrued in the Group’s FY 2023 financial statements, resulting in a c.£13m uplift in the division’s adjusted operating profit in H1 2024. Rail attributable net income from the DfT TOCs – being the Group’s share of the management fee income available for distribution from the GWR, SWR and WCP DfT contracts – was £14.0m (H1 2024: £23.2m which included the final variable fee payments for FY 2023 mentioned above, as well as the contribution of TransPennine Express which was operated by the Group until 28 May 2023). The division’s two open access operations Lumo and Hull Trains delivered further growth in adjusted operating profit in H1 2025, to £18.1m (H1 2024: £15.7m). This was due to robust passenger volumes and effective yield management, including some inflationary increases in fares, which helped offset higher costs. To address energy cost inflation, our DfT TOCs and open access operations are members of industry buying groups in order to mitigate the long-term impact of electricity costs. For our open access operations, total electricity costs represent a material proportion of their total costs; these costs decreased by c.25% in H1 2025 against H1 2024. Focused on operational delivery in our DfT TOCs Our three DfT TOCs operate under National Rail Contacts (NRCs), under which the DfT retains substantially all revenue and cost risk (including for fuel, energy and wage increases). There is a fixed management fee and the opportunity to earn an additional variable fee. The punctuality and other operational targets required to achieve the maximum level of variable fee under the contracts are designed to incentivise service delivery for customers. During FY 2024 the DfT introduced some revenue upside potential for operators within the quantitative variable fee metrics, with a Revenue Outturn Mechanism (ROM), due to run until 31 March 2025. The ROM represents an incremental fee opportunity for the Group for FY 2025 if we are able to grow the revenues of the NRC contracts within certain thresholds. We are an experienced UK rail operator and we are focused on working collaboratively with the DfT and our industry partners and stakeholders to add value, innovate and enhance our service offering, alongside the execution of a number of major investment programmes. During H1 2025 Avanti West Coast started the roll out of its new £350m fleet of ten seven-car electric and 13 five-car bi-mode Hitachi trains across the network. The fleet upgrade will not only improve the customer experience, but it will also lower emissions compared to the trains that will be replaced. In addition, the £117m investment programme to refurbish Avanti’s electric Pendolino fleet was completed and the final refurbished train went into service in June. Avanti West Coast also extended its Superfare ticket to more routes to mark the popular low-cost fare’s first anniversary. In a survey of Superfare customers, the majority said they would have not travelled or would have done so by a different mode, demonstrating how the Superfare ticket is successfully attracting people to use our services. At SWR, the team started the phased introduction of its new fleet of Alstom Class 701 trains and aim to complete the full rollout of the fleet during the next financial year. In addition, a number of newly refurbished Class 458/4 trains entered service between London Waterloo, Hounslow, Weybridge and Twickenham, to improve the customer offering. GWR worked successfully with its partners to open Ashley Down station in Bristol at the end of September, connecting the local community to the wider rail network for the first time in sixty years. The project was part of a £300m investment by the West of England Mayoral Combined Authority, in partnership with GWR, Network Rail, and Bristol City Council, to bring rail travel within easy reach of more people than ever before. GWR’s industry-first fast-charge battery-only train trial has now been running for more than six months, gathering insights to be shared with the DfT and wider industry to help shape the industry’s future decarbonisation plans. More than 300 return trips have been completed between West Ealing and Greenford, testing the technology’s capability in all elements, from extreme heat to heavy rain. The work the team has done has successfully raised the profile of fast charge as part of the potential solution for the decarbonisation of lines that are difficult or expensive to reach through traditional electrification. Leveraging our expertise and capabilities in Additional Services Our First Rail Additional Services businesses - First Customer Contact (‘FCC’), Mistral Data and First Rail Consultancy, generated revenues of £20.0m in H1 2025, up from £18.2m in H1 2024, leveraging our extensive experience and expertise. We are looking at ways to scale these businesses as we believe that private sector ancillary services suppliers will continue to be vital to the success of the rail industry, bringing experience, expertise and benefits to the sector. FCC provides customer relations, delay repay services and fraud prevention and management services to a number of train operating companies including TPE. In H1 2025, working with technology partners, FCC implemented a number of artificial intelligence tools to further improve the customer handling experience. During H1 2025, the team at Mistral Data have continued to develop new modules and services and to market their range of products to UK and international industry participants. Products include cloud-based tools focused on transport operations, staff messaging, customer engagement, revenue management, business intelligence and remote asset management. New modules and services are being developed that will be available and marketed to both existing and potential new customers. First Rail Consultancy provides expertise in all the major facets of railway operations to a range of operating companies, addressing both current services and the cost-effective delivery of major infrastructure projects, rolling stock procurement and upgrades. During H1 2025, the team qualified to work under a number of industry-wide framework agreements and continued to support a wide range of clients in the UK, as well as working on an international consultancy project. Continued delivery in open access First Rail’s two open access businesses, Lumo and Hull Trains, where we bear all revenue and cost risk and opportunity, have continued to perform well in H1 2025. Demand has remained strong, and they also remain two of the most reliable operators in the UK. Hull Trains has continued to run a ten-car service at peak demand times (typically a five-car service) to match demand; seat capacity has grown by 13%, with the seat utilisation remaining stable at 68%. Hull Trains reported a 15% increase in revenue, to £23.3m (H1 2024: £20.2m). At Lumo, profit is driven predominantly by improving demand and effective yield management, whilst still offering competitive prices. Revenue increased by 10% to £28.6m in H1 2025 (H1 2024: £26.1m), with further improvement in yields offsetting slightly higher costs. Seat capacity utilisation also rose, to 80% from 78% in the prior year. Growing our successful open access business Growing our successful open access rail portfolio is a key priority for the Group and delivers against our strategic aims of driving modal shift, leading in social and environmental sustainability and growing and diversifying our businesses. We are growing through efficiency improvements, acquiring and applying for routes where we can connect under-served communities and add value for our stakeholders. In August we acquired Grand Union Trains WCML Holdings Limited, which owns the track access rights granted by the Office of Rail and Road (‘ORR’) to run a new open access rail service on the West Coast Mainline from London Euston to Stirling. The current track access agreement runs from May 2025 for a period of five years and includes four return services a day between London Euston and Stirling, and a fifth return service between Euston and Preston. The new service will call at a number of intermediate stations in England and Scotland, including Whifflet, Greenfaulds and Larbert which will have their first direct services to London. The new service will provide more choice for passengers with significantly increased direct connections to and from London and central and southern Scotland, making use of available capacity on the network. We will provide further detail, including on rolling stock and an operational start date in due course. In January 2024, we announced that we had submitted an application for a new open access service to provide a fast link between London and Sheffield, comprising two return journeys a day from London King’s Cross, calling at Retford, Worksop, Woodhouse and Sheffield. It would be the first regular service from London King’s Cross to Sheffield since 1968 and Worksop in Nottinghamshire would have its first regular direct London train service in decades. The application is currently being reviewed as part of East Coast Mainline (‘ECML’) December 2025 timetable review process with an update anticipated in the first half of 2025. We also submitted an application to the ORR for a new open access service between Rochdale and London with a December 2027 start date. The application includes six return journeys a day, providing a direct Rochdale to London link via Manchester Victoria which last ran in 2000. The service would be operated under the successful Lumo brand, which has transformed long-distance connectivity between London and Edinburgh and helped support a growth in passenger numbers for all operators on the East Coast Mainline. It is anticipated that the trains on this new route will be new, UK manufactured, electric and battery powered trains. Following discussions with Network Rail Scotland and Transport Scotland, we also submitted an application for an extension of some of Lumo’s services to Glasgow, the expansion of some of Lumo’s services to ten car operations, as well as for a sixth return Lumo service between London and Newcastle and for Hull Trains, an eighth return service between London and Hull. These operations could commence in line with ECML timetable change. Positive discussions on these applications continue with the ORR and Network Rail, supported by detailed business case and performance modelling conducted by our internal teams and third-party experts. Transport for London contracts Having operated London Trams on behalf of Transport for London (‘TfL’) for a number of years, in March 2024, we were delighted to announce that we had been awarded the contract to operate the London Cable Car on behalf of TfL from the end of June 2024, with estimated revenues of c.£60m over the eight-year contract period. We successfully took over the operation at the end of June following several months of mobilisation activity. We look forward to working with TfL to enhance the customer proposition and place the service at the heart of its local community. As previously announced, in July 2024 we submitted a bid for the Elizabeth Line contract in partnership with Keolis SA. A period of transition in UK rail The UK rail industry is set to see considerable change over the next few years. We have been one of the largest operators for more than 25 years, during which we have worked successfully with a wide range of partners under various forms of contract types and delivered a number of significant rail infrastructure and fleet upgrade projects. Companies such as ours bring innovation, enhanced service delivery, private investment and focus on cost control to an industry that needs it – our businesses have saved more than £300m for the DfT in the last three years. Furthermore, as we look to grow our open access portfolio, we recognise what successful open access services can achieve. They can provide new connections for under-served communities, add capacity on core routes to help drive modal shift away from more carbon-intensive modes of transport, support local businesses and suppliers, create jobs and help to drive social mobility and future economic growth. We know that growth and innovation are key for the future of the railway and are committed to working with our government partners to provide competitive, sustainable and improved services for all passengers and communities. Furthermore, if the applications we have submitted to grow our open access portfolio are successful, they will not only create operational jobs, but it could also support the wider value chain through train manufacturing and associated jobs in the UK. Looking ahead Financial performance in H2 2025 is expected to be slightly ahead of our prior expectations, reflecting growth achieved in open access and a normal level of variable fee awards in the DfT TOCs (approximately two thirds of the maximum available). It is the Government’s announced policy to bring the National Rail Contracts into public ownership at the earliest possible opportunity. As the contracts transition, we anticipate a cash inflow of c.£80m from the DfT TOCs, including any reorganisation costs the Group may incur, over a three-year period from April 2025 with cash received from the management fees a year in arrears. This cash receipt includes the earnings from the division’s Additional Services businesses that are expected to continue supporting the DfT TOCs after their contracts end, as required under the National Rail Contracts. Our open access businesses are expected to continue to grow from their existing strong base and will remain capital light, with rolling stock funded through operating leases in line with track access agreements. The addition of the London to Stirling service will add capacity, albeit with a lower operating profit margin than our existing services due to comparatively higher fleet costs. As the UK rail industry goes through this period of transition, we are focused on growing in open access, identifying where we can scale our Additional Services businesses, bidding for new contracts including upcoming TfL tenders, and identifying new open access opportunities in the UK, as well as monitoring open access opportunities in Europe as the market continues to liberalise. Financial review Adjusted revenue from continuing operations increased to £649.6m (H1 2024: £634.8m). First Bus revenue increased by 2% to £513.7m, principally reflecting underlying passenger revenue growth of 10% offset by reduced government funding and the additional week in H1 2024 that added £19m. First Rail saw increased revenue across its open access and additional services businesses, offset by lower management fees in the DfT TOCs as H1 2024 included an uplift for higher than accrued FY 2023 fees. Operating performance Adjusted operating performance by division is as follows: \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 26 weeks to 28 September 2024 \t\t\t \t\t\t \t\t\t 27 weeks to 30 September 2023 \t\t\t \t\t\t \t\t\t 53 weeks to 30 March 2024 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t Adjusted Revenue 1 \t\t\t £m \t\t\t \t\t\t \t\t\t Adjusted operating profit 2 \t\t\t £m \t\t\t \t\t\t \t\t\t Adjusted operating margin 2 \t\t\t % \t\t\t \t\t\t \t\t\t Adjusted \t\t\t Revenue \t\t\t £m \t\t\t \t\t\t \t\t\t Adjusted operating profit 2 \t\t\t £m \t\t\t \t\t\t \t\t\t Adjusted operating margin 2 \t\t\t % \t\t\t \t\t\t \t\t\t Adjusted Revenue \t\t\t £m \t\t\t \t\t\t \t\t\t Adjusted \t\t\t operating profit 2 \t\t\t £m \t\t\t \t\t\t \t\t\t Adjusted \t\t\t operating margin 2 \t\t\t % \t\t\t \t\t \t\t \t\t\t \t\t\t First Bus \t\t\t \t\t\t \t\t\t 513.7 \t\t\t \t\t\t \t\t\t 41.1 \t\t\t \t\t\t \t\t\t 8.0 \t\t\t \t\t\t \t\t\t 504.9 \t\t\t \t\t\t \t\t\t 36.0 \t\t\t \t\t\t \t\t\t 7.1 \t\t\t \t\t\t \t\t\t 1,012.2 \t\t\t \t\t\t \t\t\t 83.6 \t\t\t \t\t\t \t\t\t 8.3 \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail \t\t\t \t\t\t \t\t\t 136.0 \t\t\t \t\t\t \t\t\t 67.9 \t\t\t \t\t\t \t\t\t 49.9 \t\t\t \t\t\t \t\t\t 134.7 \t\t\t \t\t\t \t\t\t 77.0 \t\t\t \t\t\t \t\t\t 57.2 \t\t\t \t\t\t \t\t\t 285.0 \t\t\t \t\t\t \t\t\t 143.3 \t\t\t \t\t\t \t\t\t 50.3 \t\t\t \t\t \t\t \t\t\t \t\t\t Group items/ eliminations 3 \t\t\t \t\t\t \t\t\t (0.1) \t\t\t \t\t\t \t\t\t (8.2) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t (4.8) \t\t\t \t\t\t \t\t\t (12.4) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t (5.4) \t\t\t \t\t\t \t\t\t (22.6) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t \t\t \t\t\t \t\t\t Continuing operations \t\t\t \t\t\t \t\t\t 649.6 \t\t\t \t\t\t \t\t\t 100.8 \t\t\t \t\t\t \t\t\t 15.5 \t\t\t \t\t\t \t\t\t 634.8 \t\t\t \t\t\t \t\t\t 100.6 \t\t\t \t\t\t \t\t\t 15.8 \t\t\t \t\t\t \t\t\t 1,291.8 \t\t\t \t\t\t \t\t\t 204.3 \t\t\t \t\t\t \t\t\t 15.8 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Discontinued operations 4 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (2.2) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (1.9) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Total \t\t\t \t\t\t \t\t\t 649.6 \t\t\t \t\t\t \t\t\t 100.8 \t\t\t \t\t\t \t\t\t 15.5 \t\t\t \t\t\t \t\t\t 634.8 \t\t\t \t\t\t \t\t\t 98.4 \t\t\t \t\t\t \t\t\t 15.5 \t\t\t \t\t\t \t\t\t 1,291.8 \t\t\t \t\t\t \t\t\t 202.4 \t\t\t \t\t\t \t\t\t 15.7 \t\t\t \t\t \t Statutory operating performance by division is as follows: \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 26 weeks to 28 September 2024 \t\t\t \t\t\t \t\t\t 27 weeks to 30 September 2023 \t\t\t \t\t\t \t\t\t 53 weeks to 30 March 2024 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t Revenue \t\t\t £m \t\t\t \t\t\t \t\t\t Operating profit \t\t\t £m \t\t\t \t\t\t \t\t\t Operating margin \t\t\t % \t\t\t \t\t\t \t\t\t Revenue \t\t\t £m \t\t\t \t\t\t \t\t\t Operating profit \t\t\t £m \t\t\t \t\t\t \t\t\t Operating margin% \t\t\t \t\t\t \t\t\t Revenue \t\t\t £m \t\t\t \t\t\t \t\t\t Operating profit \t\t\t £m \t\t\t \t\t\t \t\t\t Operating margin \t\t\t % \t\t\t \t\t \t\t \t\t\t \t\t\t First Bus \t\t\t \t\t\t \t\t\t 513.7 \t\t\t \t\t\t \t\t\t 41.1 \t\t\t \t\t\t \t\t\t 8.0 \t\t\t \t\t\t \t\t\t 504.9 \t\t\t \t\t\t \t\t\t (106.3) \t\t\t \t\t\t \t\t\t (21.1) \t\t\t \t\t\t \t\t\t 1,012.2 \t\t\t \t\t\t \t\t\t (63.3) \t\t\t \t\t\t \t\t\t (6.3) \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail \t\t\t \t\t\t \t\t\t 1,843.0 \t\t\t \t\t\t \t\t\t 67.9 \t\t\t \t\t\t \t\t\t 3.7 \t\t\t \t\t\t \t\t\t 1,721.9 \t\t\t \t\t\t \t\t\t 77.0 \t\t\t \t\t\t \t\t\t 4.5 \t\t\t \t\t\t \t\t\t 3,738.4 \t\t\t \t\t\t \t\t\t 143.3 \t\t\t \t\t\t \t\t\t 3.8 \t\t\t \t\t \t\t \t\t\t \t\t\t Group items 3 \t\t\t \t\t\t \t\t\t (12.6) \t\t\t \t\t\t \t\t\t (8.7) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t (19.8) \t\t\t \t\t\t \t\t\t (12.1) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t (35.5) \t\t\t \t\t\t \t\t\t (33.5) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t \t\t \t\t\t \t\t\t Continuing operations \t\t\t \t\t\t \t\t\t 2,344.1 \t\t\t \t\t\t \t\t\t 100.3 \t\t\t \t\t\t \t\t\t 4.3 \t\t\t \t\t\t \t\t\t 2,207.0 \t\t\t \t\t\t \t\t\t (41.4) \t\t\t \t\t\t \t\t\t (1.9) \t\t\t \t\t\t \t\t\t 4,715.1 \t\t\t \t\t\t \t\t\t 46.5 \t\t\t \t\t\t \t\t\t 1.0 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Discontinued operations 4 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 5.9 \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 0.1 \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (5.3) \t\t\t \t\t\t \t\t\t n/a \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Total \t\t\t \t\t\t \t\t\t 2,344.1 \t\t\t \t\t\t \t\t\t 106.2 \t\t\t \t\t\t \t\t\t 4.5 \t\t\t \t\t\t \t\t\t 2,207.0 \t\t\t \t\t\t \t\t\t (41.3) \t\t\t \t\t\t \t\t\t (1.9) \t\t\t \t\t\t \t\t\t 4,715.1 \t\t\t \t\t\t \t\t\t 41.2 \t\t\t \t\t\t \t\t\t 0.9 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t 1‘ Adjusted revenue’ is revenue excluding DfT TOC revenue, and related intercompany eliminations, where the Group takes substantially no revenue risk 2‘ Adjusted operating profit’ and “Adjusted operating margin” are before adjusting and certain other items as set out in note 3 to the interim financial statements. 3 Includes elimination of intra-group trading between Bus and Rail divisions, and charges relating to central management and other items. 4 Discontinued operations relates to the Group’s residual Greyhound US activities. Adjusted operating profit from continuing operations was £100.8m (H1 2024: £100.6m), reflecting growth in First Bus and lower central costs offset by First Rail. First Bus benefited from underlying passenger revenue growth of 10% and new acquisitions offset by reduced government funding, inflation and the impact of the extra week in H1 2024 (£1.4m). First Rail adjusted operating profit decreased by £9.1m reflecting the impact of higher than accrued final FY 2023 variable fees in the prior year of c.£13m and business development costs, offset by open access where strong demand and inflationary fare increases improved profitability. Central costs were £8.2m with the decrease due to continued efficiencies and a higher proportion of central costs allocated to the divisions. The Group's EBITDA adjusted for First Rail management fees performance measure were lower year-on-year driven mostly by the FY23 management fee recognised in First Rail in the prior year. \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 26 weeks to 28 September 2024 \t\t\t £m \t\t\t \t\t\t \t\t\t 27 weeks to 30 September 2023 \t\t\t £m \t\t\t \t\t\t \t\t\t 53 weeks to 30 March 2024 \t\t\t £m \t\t\t \t\t \t\t \t\t\t \t\t\t First Bus EBITDA 1 \t\t\t \t\t\t \t\t\t 63.9 \t\t\t \t\t\t \t\t\t 61.4 \t\t\t \t\t\t \t\t\t 132.5 \t\t\t \t\t \t\t \t\t\t \t\t\t Attributable net income from First Rail DfT contracted TOCs 2 \t\t\t \t\t\t \t\t\t 14.0 \t\t\t \t\t\t \t\t\t 23.2 \t\t\t \t\t\t \t\t\t 39.5 \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail – open access and Additional Services EBITDA 1 \t\t\t \t\t\t \t\t\t 22.6 \t\t\t \t\t\t \t\t\t 22.2 \t\t\t \t\t\t \t\t\t 37.6 \t\t\t \t\t \t\t \t\t\t \t\t\t Group central costs (EBITDA basis 1 ) \t\t\t \t\t\t \t\t\t (8.0) \t\t\t \t\t\t \t\t\t (12.0) \t\t\t \t\t\t \t\t\t (21.8) \t\t\t \t\t \t\t \t\t\t \t\t\t Group EBITDA adjusted for First Rail DfT contracted TOCs’ management fees \t\t\t \t\t\t \t\t\t 92.5 \t\t\t \t\t\t \t\t\t 94.8 \t\t\t \t\t\t \t\t\t 187.8 \t\t\t \t\t \t 1 Pre-IFRS 16 basis. 2 A reconciliation to the segmental disclosures is set out in note 3. Adjusted earnings were £51.8m (H1 2024: £56.5m), driven by strong adjusted operating profit performance across the business, offset by the lower net attributable management fees at the DfT TOCs. \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 26 weeks to 28 September 2024 \t\t\t £m \t\t\t \t\t\t \t\t\t 27 weeks to 30 September 2023 \t\t\t £m \t\t\t \t\t\t \t\t\t 53 weeks to 30 March 2024 \t\t\t £m \t\t\t \t\t \t\t \t\t\t \t\t\t First Bus adjusted operating profit \t\t\t \t\t\t \t\t\t 41.1 \t\t\t \t\t\t \t\t\t 36.0 \t\t\t \t\t\t \t\t\t 83.6 \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail adjusted operating profit \t\t\t \t\t\t \t\t\t 67.9 \t\t\t \t\t\t \t\t\t 77.0 \t\t\t \t\t\t \t\t\t 143.3 \t\t\t \t\t \t\t \t\t\t \t\t\t Group central costs (operating profit basis) \t\t\t \t\t\t \t\t\t (8.2) \t\t\t \t\t\t \t\t\t (12.4) \t\t\t \t\t\t \t\t\t (22.6) \t\t\t \t\t \t\t \t\t\t \t\t\t Group adjusted operating profit \t\t\t \t\t\t \t\t\t 100.8 \t\t\t \t\t\t \t\t\t 100.6 \t\t\t \t\t\t \t\t\t 204.3 \t\t\t \t\t \t\t \t\t\t \t\t\t Interest \t\t\t \t\t\t \t\t\t (30.0) \t\t\t \t\t\t \t\t\t (27.1) \t\t\t \t\t\t \t\t\t (65.3) \t\t\t \t\t \t\t \t\t\t \t\t\t Profit before tax \t\t\t \t\t\t \t\t\t 70.8 \t\t\t \t\t\t \t\t\t 73.5 \t\t\t \t\t\t \t\t\t 139.0 \t\t\t \t\t \t\t \t\t\t \t\t\t IFRS 16 DfT contracted TOCs adjustment \t\t\t \t\t\t \t\t\t 1.3 \t\t\t \t\t\t \t\t\t 5.3 \t\t\t \t\t\t \t\t\t 10.2 \t\t\t \t\t \t\t \t\t\t \t\t\t Taxation \t\t\t \t\t\t \t\t\t (17.8) \t\t\t \t\t\t \t\t\t (18.4) \t\t\t \t\t\t \t\t\t (32.0) \t\t\t \t\t \t\t \t\t\t \t\t\t Non-controlling interest \t\t\t \t\t\t \t\t\t (2.5) \t\t\t \t\t\t \t\t\t (3.9) \t\t\t \t\t\t \t\t\t (6.5) \t\t\t \t\t \t\t \t\t\t \t\t\t Group adjusted earnings \t\t\t \t\t\t \t\t\t 51.8 \t\t\t \t\t\t \t\t\t 56.5 \t\t\t \t\t\t \t\t\t 110.7 \t\t\t \t\t \t Reconciliation to non-GAAP measures and performance Note 3 to the financial statements sets out the reconciliations of operating profit and profit before tax to their adjusted equivalents. The principal adjusting items in H1 2025 are as follows: Greyhound Canada A net £0.5m charge was incurred in the period relating to the continued winding down of Greyhound Canada operations. The principal adjusting items in relation to the operating profit adjustments - discontinued operations were as follows: CARES receipt A credit of £0.4m was recognised in the period on receipt of CARES funding in relation to the discontinued North American operations. Legacy US pensions scheme buy out On 16 July 2024, the Group agreed terms with an insurance company to buy out the remaining liabilities of the legacy Greyhound US pension plan, with the plan being terminated thereafter. Following a Group contribution of $6m, gross liabilities valued at $155m (£123m) at the FY 2024 year-end were removed from the Group's balance sheet and the Group recognised a net settlement gain after related costs of £5.5m in the income statement as an adjusting item. The principal adjusting items in H1 2024 were as follows: First Bus pension settlement charge and related items In September 2023, First Bus concluded a period of consultation with regards to its two Local Government Pension Funds and subsequently terminated its participation in these funds on 31 October 2023, with affected employees enrolled into the First Bus Retirement Savings Plan. Adjusting charges of £142.3m were recognised in the prior period for the settlement charge and related termination costs. A gain of £160.4m was recognised in Other comprehensive income in relation to the restricted accounting surplus. Adjusting items – discontinued operations An initial payment of the First Transit earnout consideration of $62.8m (£48.9m) was received during the first half of the prior year. At that time, an adjusting credit of £2.3m arose as a result of the hedging of the cash receipt and the retranslation of the US dollar asset into pounds sterling. Group statutory operating profit Statutory operating profit (continuing basis) was £100.3m (H1 2024: loss of £(41.4)m reflecting the First Bus pension settlement charge and related costs). Finance costs and investment income Net finance costs were £30.0m (H1 2024: £27.1m) with the increase principally due to additional PCV finance leases, lower interest receivable on deposits and lower IFRS 16 interest charge in the DfT TOCs. Profit before tax Statutory profit before tax (continuing basis) was £70.3m (H1 2024: loss of £(68.5)m). Adjusted profit before tax (continuing basis) as set out in note 3 to the financial statements was £70.8m (H1 2024: £73.5m). Adjusting items (continuing basis) were a charge of £0.5m, relating to the continued winding down of Greyhound Canada operations. (H1 2024: charge of £142.0m, primarily reflecting the First Bus pension settlement charge and related costs). Tax The tax charge on adjusted profit before tax on continuing operations was £17.8m (H1 2024: £18.4m), representing an effective tax rate of 25.1% (H1 2024: 25.0%). The effective rate remains broadly in line with the UK rate. There was no tax relating to adjusting items (H1 2024: credit of £35.6m). The total tax charge, including tax on discontinued operations, was £17.8m (H1 2024: credit of £(17.2)m). The actual tax paid during the period was £0.8m (H1 2024: £1.5m). The ongoing Group's effective tax rate is expected to be broadly in line with UK corporation tax levels (currently 25%). EPS Adjusted continuing EPS was 8.5p (H1 2024: 8.1p). Basic continuing EPS was 8.2p (H1 2024: (7.9)p). Shares in issue As at 28 September 2024 there were 598.6m shares in issue (H1 2024: 662.5m), excluding treasury shares and own shares held in trust for employees of 152.1m (H1 2024: 88.2m). The Company’s £115m share buyback programme completed on 5 August 2024 having repurchased 71,200,278 shares. The weighted average number of shares in issue for the purpose of basic EPS calculations (excluding treasury shares and own shares held in trust for employees) in the period was 608.5m (H1 2024: 697.7m). Capital allocation framework The Group's capital allocation framework can be summarised as follows: \t \t\t \t\t\t \t\t\t Investment \t\t\t \t\t\t \t\t\t • First Bus: £125m net cash capex for FY 2025, mostly on electrification \t\t\t • First Rail: continues to be cash capital-light, with any capital expenditure required by the management fee-based operations fully funded under the new contracts and open access rolling stock operating leases in line with the track access agreements \t\t\t \t\t \t\t \t\t\t \t\t\t Growth \t\t\t \t\t\t \t\t\t • Actively reviewing adjacent organic and inorganic opportunities where this creates value for shareholders and exceeds the Group’s pre-tax WACC (c.10%) \t\t\t \t\t \t\t \t\t\t \t\t\t Returns for shareholders \t\t\t \t\t\t \t\t\t • Progressive dividend policy currently around 3x cover of Group adjusted earnings; paid c.1/3 interim and 2/3 final dividend \t\t\t • Interim dividend of 1.7p per share declared \t\t\t • Additional £50m buyback announced \t\t\t • The Board remains committed to returning surplus cash to shareholders \t\t\t \t\t \t\t \t\t\t \t\t\t Balance sheet \t\t\t \t\t\t \t\t\t • Less than 2.0x Adjusted Net Debt: rail management fee-adjusted EBITDA target in the medium term \t\t\t \t\t \t Dividend The Board has declared an interim dividend of 1.7p per share (c.£10m in aggregate), to be paid on 31 December 2024 to shareholders on the register at 29 November 2024. Adjusted cash flow The Group's adjusted cash outflow of £(7.8)m (H1 2024: outflow of £(108.0)m) in the period reflects strong underlying cash generated by operations offset by capital outflows relating to investment in First Bus, the impact of the share buyback programmes, lease payments and movement in First Rail ring-fenced cash (£25.3m outflow since FY 2024). The adjusted cash flow is set out below: \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 26 weeks to 28 September 2024 \t\t\t £m \t\t\t \t\t\t \t\t\t 27 weeks to 30 September 2023 \t\t\t £m \t\t\t \t\t\t \t\t\t 53 weeks to 30 March 2024 \t\t\t \t\t\t £m \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted EBITDA \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 362.0 \t\t\t \t\t\t \t\t\t 342.3 \t\t\t \t\t\t \t\t\t 748.6 \t\t\t \t\t \t\t \t\t\t \t\t\t Other non-cash income statement charges \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 6.4 \t\t\t \t\t\t \t\t\t (134.3) \t\t\t \t\t\t \t\t\t 13.7 \t\t\t \t\t \t\t \t\t\t \t\t\t Working capital \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 19.1 \t\t\t \t\t\t \t\t\t (74.9) \t\t\t \t\t\t \t\t\t (117.0) \t\t\t \t\t \t\t \t\t\t \t\t\t Movement in other provisions \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (31.3) \t\t\t \t\t\t \t\t\t (18.8) \t\t\t \t\t\t \t\t\t (30.2) \t\t\t \t\t \t\t \t\t\t \t\t\t Movement in financial assets/contingent consideration receivable \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (1.0) \t\t\t \t\t\t \t\t\t 26.0 \t\t\t \t\t\t \t\t\t 23.7 \t\t\t \t\t \t\t \t\t\t \t\t\t Settlement of foreign exchange hedge \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (1.1) \t\t\t \t\t\t \t\t\t (1.1) \t\t\t \t\t \t\t \t\t\t \t\t\t Pension payments lower than income statement charge \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (4.7) \t\t\t \t\t\t \t\t\t 113.1 \t\t\t \t\t\t \t\t\t (9.3) \t\t\t \t\t \t\t \t\t\t \t\t\t Cash generated by operations \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 350.5 \t\t\t \t\t\t \t\t\t 252.3 \t\t\t \t\t\t \t\t\t 626.6 \t\t\t \t\t \t\t \t\t\t \t\t\t Capital expenditure and acquisitions \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (74.0) \t\t\t \t\t\t \t\t\t (115.6) \t\t\t \t\t\t \t\t\t (236.0) \t\t\t \t\t \t\t \t\t\t \t\t\t Proceeds from disposal of property, plant and equipment \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 10.1 \t\t\t \t\t\t \t\t\t 17.2 \t\t\t \t\t\t \t\t\t 42.8 \t\t\t \t\t \t\t \t\t\t \t\t\t Proceeds from capital grant funding \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 23.8 \t\t\t \t\t\t \t\t\t 55.3 \t\t\t \t\t\t \t\t\t 94.8 \t\t\t \t\t \t\t \t\t\t \t\t\t Proceeds from contingent consideration \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 48.9 \t\t\t \t\t\t \t\t\t 65.3 \t\t\t \t\t \t\t \t\t\t \t\t\t Interest and tax \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (31.6) \t\t\t \t\t\t \t\t\t (31.4) \t\t\t \t\t\t \t\t\t (67.6) \t\t\t \t\t \t\t \t\t\t \t\t\t Shares purchased for Employee Benefit Trust \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (9.3) \t\t\t \t\t\t \t\t\t (6.1) \t\t\t \t\t\t \t\t\t (16.5) \t\t\t \t\t \t\t \t\t\t \t\t\t Share repurchases from buyback programmes, including costs \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (41.4) \t\t\t \t\t\t \t\t\t (66.6) \t\t\t \t\t\t \t\t\t (117.6) \t\t\t \t\t \t\t \t\t\t \t\t\t External dividends paid \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (24.0) \t\t\t \t\t\t \t\t\t (19.7) \t\t\t \t\t\t \t\t\t (29.5) \t\t\t \t\t \t\t \t\t\t \t\t\t Dividends paid to non-controlling interests \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (6.5) \t\t\t \t\t \t\t \t\t\t \t\t\t Settlement of foreign exchange hedge \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 4.2 \t\t\t \t\t\t \t\t\t 4.1 \t\t\t \t\t \t\t \t\t\t \t\t\t Lease payments now in debt \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (211.9) \t\t\t \t\t\t \t\t\t (246.5) \t\t\t \t\t\t \t\t\t (526.2) \t\t\t \t\t \t\t \t\t\t \t\t\t Fees for finance facilities \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (1.4) \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted cash flow \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (7.8) \t\t\t \t\t\t \t\t\t (108.0) \t\t\t \t\t\t \t\t\t (167.7) \t\t\t \t\t \t\t \t\t\t \t\t\t Foreign exchange movements \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1.5 \t\t\t \t\t\t \t\t\t 0.8 \t\t\t \t\t\t \t\t\t 3.4 \t\t\t \t\t \t\t \t\t\t \t\t\t Net inception of leases \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (37.9) \t\t\t \t\t\t \t\t\t (14.8) \t\t\t \t\t\t \t\t\t (237.5) \t\t\t \t\t \t\t \t\t\t \t\t\t Lease payments in debt \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 211.9 \t\t\t \t\t\t \t\t\t 246.5 \t\t\t \t\t\t \t\t\t 526.2 \t\t\t \t\t \t\t \t\t\t \t\t\t Other non-cash movements \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t (0.1) \t\t\t \t\t \t\t \t\t\t \t\t\t Movement in net debt in the period \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 167.7 \t\t\t \t\t\t \t\t\t 124.5 \t\t\t \t\t\t \t\t\t 124.3 \t\t\t \t\t \t Capital expenditure Non-First Rail cash capital expenditure was £60.1m, which related to First Bus and Group items (H1 2024: £95.2m). First Rail cash capital expenditure was £12.4m (H1 2024: £20.4m) and is typically matched by receipts from the DfT under current contractual arrangements or other funding. During the period leases in the non-First Rail divisions were entered into with capital values in First Bus of £9.2m and Group items of £0.7m (H1 2024: Bus £5.5m and Group items £1.3m). First Rail entered into leases with a capital value of £21.8m (H1 2024: £9.0m). During the period asset backed financial liabilities were entered into in First Bus of £35.1m (H1 2024: £nil). Non-First Rail gross capital investment (fixed asset and software additions, plus the capital value of new leases) was £53.1m and comprised First Bus £52.4m and Group items £0.7m (H1 2024: £88.8m, comprising First Bus £88.7m, Group items £0.1m). First Rail gross capital investment was £35.8m (H1 2024: £35.2m). The balance between cash capital expenditure and gross capital investment represents new leases, creditor movements and the recognition of additional right of use assets in the period. Funding As at the period end, the Group had £532.7m of undrawn committed headroom and free cash (FY 2024: £705.2m), being £300.0m (FY 2024: £300.0m) of committed undrawn headroom on the RCF, £97.7m (FY 2024: £129.8m) committed undrawn headroom on the Green Hire Purchase facility, £42.2m (FY 2024: £54.9m) committed undrawn headroom on the NextGen battery finance facility and £92.8m (FY 2024: £220.5m) of net free cash after offsetting overdraft positions. Net debt/(cash) As at 28 September 2024 the Group’s adjusted net debt, which excludes IFRS 16 lease liabilities and ring-fenced cash, was £0.2m (FY 2024: adjusted net cash of £(64.1)m). Reported net debt was £977.1m (FY 2024: £1,144.8m) after IFRS 16 and including ring-fenced cash of £(274.9)m (FY 2024: £(249.6)m), as follows: \t \t\t \t\t\t \t\t\t Analysis of net debt \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 28 September 2024 \t\t\t £m \t\t\t \t\t\t \t\t\t 30 September \t\t\t 2023 \t\t\t £m \t\t\t \t\t\t \t\t\t 30 March 2024 \t\t\t £m \t\t\t \t\t \t\t \t\t\t \t\t\t Sterling bond (2024) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 172.0 \t\t\t \t\t\t \t\t\t 96.2 \t\t\t \t\t \t\t \t\t\t \t\t\t Bank loans and overdrafts \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 70.6 \t\t\t \t\t\t \t\t\t 96.4 \t\t\t \t\t\t \t\t\t 27.8 \t\t\t \t\t \t\t \t\t\t \t\t\t Lease liabilities \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,251.8 \t\t\t \t\t\t \t\t\t 1,529.0 \t\t\t \t\t\t \t\t\t 1,458.5 \t\t\t \t\t \t\t \t\t\t \t\t\t Asset backed financial liabilities \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 72.1 \t\t\t \t\t\t \t\t\t 32.1 \t\t\t \t\t\t \t\t\t 45.6 \t\t\t \t\t \t\t \t\t\t \t\t\t NextGen (Hitachi JV) facility \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 19.4 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 13.2 \t\t\t \t\t \t\t \t\t\t \t\t\t Loan notes \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t - \t\t\t \t\t\t \t\t\t 0.6 \t\t\t \t\t\t \t\t\t - \t\t\t \t\t \t\t \t\t\t \t\t\t Gross debt excluding accrued interest \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,413.9 \t\t\t \t\t\t \t\t\t 1,830.1 \t\t\t \t\t\t \t\t\t 1,641.3 \t\t\t \t\t \t\t \t\t\t \t\t\t Cash \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (161.9) \t\t\t \t\t\t \t\t\t (378.2) \t\t\t \t\t\t \t\t\t (246.9) \t\t\t \t\t \t\t \t\t\t \t\t\t First Rail ring-fenced cash and deposits \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (271.2) \t\t\t \t\t\t \t\t\t (303.2) \t\t\t \t\t\t \t\t\t (245.6) \t\t\t \t\t \t\t \t\t\t \t\t\t Other ring-fenced cash and deposits \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (3.7) \t\t\t \t\t\t \t\t\t (4.1) \t\t\t \t\t\t \t\t\t (4.0) \t\t\t \t\t \t\t \t\t\t \t\t\t Net debt excluding accrued interest \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 977.1 \t\t\t \t\t\t \t\t\t 1,144.6 \t\t\t \t\t\t \t\t\t 1,144.8 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t IFRS 16 lease liabilities – rail \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,198.7 \t\t\t \t\t\t \t\t\t 1,492.2 \t\t\t \t\t\t \t\t\t 1,408.9 \t\t\t \t\t \t\t \t\t\t \t\t\t IFRS 16 lease liabilities – non-rail \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 53.1 \t\t\t \t\t\t \t\t\t 36.8 \t\t\t \t\t\t \t\t\t 49.6 \t\t\t \t\t \t\t \t\t\t \t\t\t IFRS 16 lease liabilities – total \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 1,251.8 \t\t\t \t\t\t \t\t\t 1,529.0 \t\t\t \t\t\t \t\t\t 1,458.5 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Net cash excluding accrued interest (pre-IFRS 16) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t (274.7) \t\t\t \t\t\t \t\t\t (384.4) \t\t\t \t\t\t \t\t\t (313.7) \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t \t\t \t\t\t \t\t\t Adjusted net debt/(cash) (pre-IFRS 16 and excluding ring-fenced cash) \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 0.2 \t\t\t \t\t\t \t\t\t (77.1) \t\t\t \t\t\t \t\t\t (64.1) \t\t\t \t\t \t Under the terms of the First Rail contractual agreements with the DfT, cash can only be distributed by the TOCs either up to the lower amount of their retained profits or the amount determined by prescribed liquidity ratios. The ring-fenced cash represents that which is not available for distribution or the amount required to satisfy the liquidity ratios at the balance sheet date. Interest rate risk Exposure to floating interest rates is managed to ensure that at least 50% (but at no time more than 100%) of the Group's pre-IFRS 16 gross debt is fixed rate for the medium term. Fuel and electricity price risk We use a progressive forward hedging programme to manage commodity risk. As at November 2024, 86% of our ‘at risk’ UK crude requirements for H2 2025 (38.4m litres, which is all in First Bus) was hedged at an average rate of 48.7p per litre, 62% of our requirements for the year to the end of March 2026 at 49.3p per litre, and 25% of our requirements for the year to the end of March 2027 at 45.7p per litre. We also have an electricity hedge programme in place, with 78% of our consumption (based on current consumption forecasts) hedged for H2 2025 at £137/MWh, 68% for FY 2026 at £73/MWh and 33% for FY 2027 at £70/MWh. Foreign currency risk ‘Certain’ and ‘highly probable’ foreign currency transaction exposures (including fuel purchases for the UK divisions) may be hedged at the time the exposure arises for up to two years at specified levels, or longer if there is a very high degree of certainty. The Group does not hedge the translation of earnings into the Group reporting currency but accepts that reported Group earnings will fluctuate as exchange rates against pounds Sterling fluctuate for the currencies in which the Group does business, although this exposure is materially reduced following the sales of the North American divisions. During the year, the net cash generated in each currency may be converted by Group Treasury into pounds Sterling by way of spot transactions in order to keep the currency composition of net debt broadly constant. Foreign exchange The most significant exchange rates to pounds Sterling for the Group are as follows: \t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t 28 September 2024 \t\t\t \t\t\t \t\t\t 30 September 2023 \t\t\t \t\t\t \t\t\t 30 March 2024 \t\t\t \t\t \t\t \t\t\t \t\t\t \t\t\t \t\t\t \t\t\t Closing rate \t\t\t \t\t\t \t\t\t Effective rate \t\t\t \t\t\t \t\t\t Closing rate \t\t\t \t\t\t \t\t\t Effective rate \t\t\t \t\t\t \t\t\t Closing rate \t\t\t \t\t\t \t\t\t Effective rate \t\t\t \t\t \t\t \t\t\t \t\t\t US Dollar \t\t\t \t\t\t \t\t\t 1.34 \t\t\t \t\t\t \t\t\t 1.32 \t\t\t \t\t\t \t\t\t 1.22 \t\t\t \t\t\t \t\t\t 1.26 \t\t\t \t\t\t \t\t\t 1.26 \t\t\t \t\t\t \t\t\t 1.26 \t\t\t \t\t \t\t \t\t\t \t\t\t Canadian Dollar \t\t\t \t\t\t \t\t\t 1.81 \t\t\t \t\t\t \t\t\t 1.80 \t\t\t \t\t\t \t\t\t 1.66 \t\t\t \t\t\t \t\t\t 1.70 \t\t\t \t\t\t \t\t\t 1.71 \t\t\t \t\t\t \t\t\t 1.77 \t\t\t \t\t \t Pensions We have updated our pension assumptions for the defined benefit schemes in the UK and North America. The net pension deficit of £25.3m at the beginning of the reporting period moved to a net...