FirstGroup plc Results for the year to 31 March 2020
Wednesday 8 July 2020
8 July 2020 FirstGroup results for the year to 31 March 2020 Matthew Gregory
Chief Executive
8 July 2020 FirstGroup results for the year to 31 March 2020 2 FirstGroup at the heart of our communities
Our first priority is the health and safety of our passengers and employees. Beyond providing safe and vital transport links for key workers, we have been supporting our communities by ▪ delivering food supplies to vulnerable families ▪ transporting essential medical supplies and safety kit ▪ donations of food/supplies from our businesses with a catering offer ▪ enabling our sites to be used for local initiatives and fundraising ▪ delivering home schooling and online resources ▪ giving employees time to volunteer for charities and community groups
8 July 2020 FirstGroup results for the year to 31 March 2020 3 Overview ▪ Progress made with our plans during the year − Launched sale processes for North American divisions in March, although speed of conclusion affected by coronavirus − Revenue growth and strong bid seasons for First Student and First Transit − First Bus digital transformation and network optimisation; effective partnerships with government − West Coast Partnership rail franchise won; extended GWR to continue transformation of that network − Against this, headwinds included ongoing challenges for Greyhound, hardening of US insurance market and slower pace of cost efficiency progress in First Bus − Despite headwinds, our expectation was for adjusted operating profit to be broadly comparable to prior year until the onset of coronavirus
▪ Significant impact on profit from coronavirus across our markets in 2020 − Swift and comprehensive funding and support across all our divisions from governments and customers demonstrates critical importance of public transportation − Rapid action to protect our ability to deliver vital services and restore capacity: costs, cash, liquidity − Adjusted cash flow ahead of expectations in 2020 and current liquidity of £850m increased since April − Continued uncertainties include fiscal support tapering, duration of social distancing, rate and extent of demand recovery
▪ Local transport services recognised as integral to the restoration of economic growth over time
8 July 2020 FirstGroup results for the year to 31 March 2020 4 Ryan Mangold
Chief Financial Officer
8 July 2020 FirstGroup results for the year to 31 March 2020 5 Financial summary
Change ex IFRS £m Mar 2020 Mar 2019 Change 16 impact1 in CCy
Revenue 7,754.6 7,126.9 +8.8% +7.2% Adjusted2 - EBITDA 1,108.9 670.3 +65.4% (9.4)% - Operating profit 256.8 314.8 (18.4)% (22.1)% - Margin % 3.3% 4.4% (110)bps (120)bps - Net finance costs (146.9) (106.6) +37.8% - Profit before tax 109.9 208.2 (47.2)% (32.3)% - Effective tax rate % 22.4% 22.4% - - Attributable profit 82.7 159.8 (48.2)% (33.1)% - EPS p 6.8p 13.3p (48.9)% (33.3)% Pre-IFRS 16 net cash inflow 98.5 197.3 (50.0)% Net debt3 3,278.1 903.4 n/m - Of which, bonds, bank and other debt net of cash 896.2 903.4 (0.8)% - Of which, IFRS 16 right of use lease liabilities 2,381.9 - Reported net debt: EBITDA x 3.0x 1.3x Ring-fenced cash adjusted net debt pre-IFRS16: 2.4x 2.1x EBITDA x 1 Change excluding first time adoption of IFRS 16 (leases) which resulted in a net increase in Adjusted PBT in the period of £6.4m, – see page 41. Change in constant currency ('CCy') is based on retranslating FY 2019 foreign currency amounts at FY 2020 rates 2 Before other intangible asset amortisation charges and certain other items 3 Net debt is stated excluding accrued bond interest
8 July 2020 FirstGroup results for the year to 31 March 2020 6 Revenue performance
▪ Group revenue in constant currency +7.2% or +2.6% excluding the Avanti West Coast franchise that started in December 2019
▪ Growth in First Student, First Transit and First Rail; Greyhound decrease includes withdrawal from Western Canada and First Bus reflects the poor summer weather in H1 and sales of Manchester depots
▪ £122m revenue impact from coronavirus in final weeks of the year
575.3 0.5 7,876.3 7,754.6
(121.7)
69.7 84.5 107.7 7,234.6 (56.7) (31.6)
7,126.9
First
items
First
Group
Transit
Student
revenue revenue
First Rail First
First Bus First
baseline
sub-total
Currency
Mar 2019 Mar 2019 Mar 2020 Mar 2020 Mar
s impact s
Coronaviru Greyhound
8 July 2020 FirstGroup results for the year to 31 March 2020 7 Adjusted operating profit
▪ North American divisional trading performances reflect higher self-insurance charges of £29.4m ($36.8m) in total and driver shortage pressures; both being reflected in pricing and investment plans going forward ▪ As noted previously, slower cost efficiency programme progress in First Bus than planned ▪ IFRS 16 effect on adj. op. profit c.£20m less than guided due to accounting treatment of rail provisions ▪ Net coronavirus impact includes drop through of lower revenues partially offset by lower variable costs, limited initial customer and government funding in the period, and start of cost saving actions ▪ Software amortisation of £16.1m (2019: £18.1m) now charged to adjusted operating profit, reflecting evolving market practice 332.9 6.5 321.3 8.4 303.9 6.4 (18.1) (4.2) 21.2 (17.1) (12.8) 256.8 (12.9)
(53.5)
baseline
sub-total
Currency
impact
First Rail First
First Bus First
Mar 2019 Mar Mar 2020 Mar
leases)
Software
Greyhound
Mar 2020 Mar Mar 2019 Mar
First Transit First
IFRS 16 (op 16 IFRS Coronavirus
Group items Group
amortisation
First Student First
adj. op. profit op. adj. adj. op. profit op. adj.
8 July 2020 FirstGroup results for the year to 31 March 2020 8 Income statement – continued
Reported Change in £m Mar 2020 Mar 2019 change CCy
Adjusted
Operating profit 256.8 314.8 (18.4)% (20.1)% Includes impact Net finance costs (146.9) (106.6) +37.8% of transition to IFRS 16 Profit before tax 109.9 208.2 (47.2)% (48.2)%
Tax (24.6) (46.6)
- Effective tax rate % 22.4% 22.4% - 22-23% tax rate guidance unchanged Non-controlling interests (2.6) (1.8) Rail franchise partners (in SWR Attributable profit 82.7 159.8 (48.2)% (49.2)% and WCP)
EPS p 6.8p 13.3p (48.9)% (49.6)%
8 July 2020 FirstGroup results for the year to 31 March 2020 9 Non-GAAP adjustments
H1 FY ▪ Greyhound impairments and North American £m 2020 2020 insurance provisions discussed overleaf Amortisation charges (11.8) (4.9) ▪ Student losses on onerous contracts: charge for unavoidable losses as a result of coronavirus on contracts which have either been lost or were up for Student losses on onerous contracts - (14.1) bid at the balance sheet date Fuel over hedge - (7.4) ▪ Fuel over hedge: charge relating to ineffectiveness on Coronavirus-related adjusting items - (21.5) fuel hedges as a result of dramatically lower forecast volumes due to coronavirus, (particularly First Bus and First Student) Greyhound impairment (124.4) (186.9) North America insurance provisions (59.3) (141.3) ▪ Restructuring and reorganisation of which a large part relates to externally facilitated Group-wide initiative to Restructuring and reorganisation (15.4) (58.2) achieve systematic and structured cost efficiencies. Transit legacy pension settlement (4.9) (4.9) Also includes legal, professional and other costs Increase in SWR performance bond - (1.1) associated with the proposed rationalisation of the Group Profit on Greyhound property disposals - 1.3 Profit on Student property disposals - 8.0 ▪ First Transit legacy pension settlement: relates to a business disposed of in 2013 Other non-GAAP adjusting items (204.0) (383.1) ▪ Increase in SWR performance bonds due to RPI from £15.0m to £16.1m Total non-GAAP adjustments (215.8) (409.5) ▪ Profit on property disposals: principally relating to Greyhound withdrawal from Western Canada and in First Student
8 July 2020 FirstGroup results for the year to 31 March 2020 10 Greyhound impairments
▪ Greyhound was impaired by £124.4m ($153.3m) at H1 reflecting updated view of profitability and outlook
▪ Further Greyhound impairment of £62.5m ($77.9m) at year end, largely as a result of an increase in the market rate used to discount the future cash flows of the business
As at 31 March 2020 £m $m
Greyhound CGU valuation 188.7 235.2 Other Greyhound net liabilities, including working capital (61.2) (76.3) Pension deficit (IAS 19 basis) (172.4) (214.8) Self-insurance reserve provision (111.4) (138.8) (156.3) (194.7)
▪ No impairments made to Greyhound’s real estate, reflecting recent valuations in excess of book value
▪ Greyhound £35.3m ($44.0m) EBITDA (post-IFRS 16) over the past twelve months
8 July 2020 FirstGroup results for the year to 31 March 2020 11 North America insurance reserves (1)
▪ Hardening environment for all businesses with US motor claims exposure
▪ Announced last year end an increase in reserve to $533m based on actuaries’ recommendation and a second, independent actuarial review
▪ Since then, claims environment has continued to deteriorate with court judgements that are more punitive and increasingly in favour of plaintiffs in certain regions, and further adverse settlements and developments on a number of aged insurance claims
▪ Therefore as at 31 March 2020: − Our actuaries have increased their reserve range expectation to $551m to $683m with the midpoint increasing by $109m since the start of the year − We have taken the decision to increase the reserve to provide additional protection − Since the start of the year changes in the market-based discount rate for the actuarial calculation has increased the provision required by a further $26m − The total adjusting charge for deterioration in historical claims, including the reduction in the discount rate, is $175m (of which $73m was recorded at the half year), and the reserve now stands at $657m
▪ It is expected that the majority of these claims will be settled over the next five years
8 July 2020 FirstGroup results for the year to 31 March 2020 12 North America insurance reserves (2)
▪ Insurance charge increases are reflected in the adjusted operating profit in these results to reflect this revised environment
▪ Taking a range of actions in response, including:
− North American divisions continue to build the higher insurance costs into their bidding processes and hurdle rates for investment
− Improvements have been made to claims management and settlement processes during H2
− Group also actively evaluates alternatives to reduce insurance risk and ongoing expense; anticipates extinguishing the self-insurance provision as part of the North American sale processes
▪ Experience of settlements over past three months are broadly at actuarial valuation levels
▪ The Group has a strong safety record and focus on risk management – for example, First Student has achieved four consecutive years of reduced injuries, down 34% over the period
▪ Robust safety management systems maintained throughout the Group with clear focus on compliance with policies, processes and procedures combined with investment in technology and training
▪ In the months since the start of the coronavirus lockdowns, accident statistics are significantly reduced
8 July 2020 FirstGroup results for the year to 31 March 2020 13 Group pre-IFRS 16 cash flow (£m)
▪ Net cash flow was ahead of expectations 482.6 Includes West Coast Partnership working capital inflow of £64m
90.6 286.5 46.7
195.9 (39.0) (261.6) (64.6) (7.2) (85.9) 120.3 98.5 (41.4)
(21.8)
flow
proceeds
Acquisitions
Road capex Road
flow
Exceptionals
Net cash flowcashNet
/ / other
Road EBITDA Road
Road disposal Road
Free cash flowcash Free
Interestandtax
in excess of P&L of in excess
Pensions charge
otherprovisions
Rail operating cash operating Rail
Operating cash flow cash Operating
Roadinsurance and
Roadoperating cash Road working capital working Road
8 July 2020 FirstGroup results for the year to 31 March 2020 14 Actions taken on liquidity and pension
In addition to cost control measures in light of very substantially reduced passenger volumes in each division:
▪ Full capital expenditure programme review − Future commitments on hold and managing existing orders accordingly − Increased utilisation of lease financing where appropriate
▪ Set up commercial paper programme to access UK COVID corporate Finance Facility (CCFF) scheme − Issuer limit of £300m based on credit ratings under the terms of the scheme − On confirmation of eligibility on 24 April, activated £300m issuance to further enhance liquidity
▪ New £250m bank bridge facility for part-refinancing the £350m April 2021 bond put in place; other major liability due in next two years is the CCFF paper currently due in March 2021, which can be rolled over
▪ Agreed supplier financing arrangements of >$100m and £75m in new vehicle leasing facilities
▪ Net pension deficit increased modestly to £313.4m (2019: £307.2m) despite falls in asset values in March, reflecting past efforts to derisk the scheme − The Group recently agreed First Bus triennial valuation on a funding basis as at 1 April 2019 − Overall cash contribution to First Bus pensions reduced by more than £10m for 2021 compared with the previous position; future overall contributions remain broadly in line with recent years
8 July 2020 FirstGroup results for the year to 31 March 2020 15 Strong liquidity, stable financing position
▪ Adjusted cash flow was ahead of our expectations in 2020
▪ At year end, net debt (ex-IFRS 16) £896.2m (2019: £903.4m), with committed headroom under bank facilities plus free cash: £585.7m (2019: £520.6m)
▪ Liquidity increased since year end; c.£850m in committed undrawn headroom plus free cash at end June
▪ Additional uncommitted facilities include £150m accordion on bank RCF, the supplier financing arrangements of >$100m and £75m in new vehicle leasing facilities
▪ Net debt: EBITDA was 1.4x (2019: 1.3x) on banking covenant test basis (which requires <3.75 times) at year end, or 2.4x adjusted for Rail ring-fenced cash and pre-IFRS 16 (2019: 2.1x)
▪ S&P and Fitch recently reaffirmed BBB- credit ratings, whilst revising outlook to negative from stable
▪ Average maturity of bonds, loan notes and bank facilities is 3.3 years (2019: 4.3 years)
▪ c.70% of net debt denominated in US Dollars; c.50% at fixed interest rates
8 July 2020 FirstGroup results for the year to 31 March 2020 16 Summary
▪ Swift and comprehensive funding and support measures for all divisions from governments and customers
▪ Not currently possible to provide guidance for the current financial year given the material uncertainties in many of the Group’s markets − Including how rapidly demand will increase, rate at which current fiscal and support measures are tapered, duration of social distancing measures, timing of schools reopening in North America
▪ However based on current fiscal support from governments, payments from customers and the cost reductions made in response to lower demand: − Group has generated positive adjusted operating profit and positive cash from operations before capital expenditure since the start of the current financial year − Recognising the usual seasonality of First Student over the school summer holidays, we expect this relatively resilient financial performance to persist while these arrangements remain in place
▪ Undrawn committed liquidity increased to £850m reflecting additional funding measures arranged and the cash performance of the Group year to date; ongoing access to various forms of debt financing
▪ Continued fiscal measures are ensuring our critical services play their integral role in the restoration of economies as lockdowns ease
8 July 2020 FirstGroup results for the year to 31 March 2020 17 Matthew Gregory
Chief Executive
8 July 2020 FirstGroup results for the year to 31 March 2020 18 Coronavirus impact on our markets
Division Impact on Volume reduction to Volume reduction service provision low point currently
All schools in North America closed, First Student 100% ~100% minimal charter work underway
First Varies by sub-segment but service levels 40% 35% Transit fell by 40% on average
Routes sufficient to maintain national Greyhound network but lower frequency; mileage 85% 70% down >60%
Mileage initially down 60%, being First Bus restored progressively (now down c.20%) 90% 75% with government funding
Weekend service across industry initially First Rail agreed with UK government; now being 95% 90% progressively restored
8 July 2020 FirstGroup results for the year to 31 March 2020 19 Cost reduction and cash preservation actions
▪ Proactive steps taken to prioritise cash flow in light of very substantially reduced passenger volumes
− Substantial proportion of total workforce in North America and the UK furloughed under the terms of governments’ emergency job retention measures, beginning to return to work as service levels increase
− Significant reductions in all non-essential operating and capital expenditures
− Headcount reductions in certain areas, particularly where customers have chosen not to support employee retention by maintaining some level of contractual payments
− Executive Directors and Board voluntarily reduced salaries and fees by 20%
− Salary reductions and deferrals also taken across wider senior management
− Also utilising tax payment holidays and other emergency measures that governments have put in place to assist companies during this time
▪ Focus is on protecting the Group for the long term, while ensuring we maintain critical services now and remain well positioned to raise capacity rapidly when appropriate
8 July 2020 FirstGroup results for the year to 31 March 2020 20 First Student: year in review
▪ Strong bid season in 2019 – net fleet increase to c.43,000 and growth in market share again
− 88% retention rate on ‘at risk’ business (96% overall) reflects strong safety and record-breaking customer satisfaction record
− New business mainly net share shift from large competitors, some organic/conversion
− Price increases continued to cover off cost inflation Adj op. $m Revenue ▪ Bolt-on M&A – three transactions (850 buses), profit entry into Special Education segment Mar 2019 2,424.9 227.1 Weather (3.2) 0.1 ▪ Strong school start-up last September despite Pricing above inflation 30.1 30.1 strength of the US employment market at the time; Net growth 23.5 2.7 procurement, operational and maintenance Management initiatives - 7.8 efficiencies partially offset by self-insurance costs Pay above inflation - (28.6) Insurance - (11.7) ▪ Innovation through proprietary tablet-based Inflation / FX / Other 53.0 (5.3) driver workflow system Mar 2020 (pre-coronavirus) 2,528.3 222.2 Coronavirus impact (53.4) (16.3) ▪ First Student is at the forefront of developments Mar 2020 2,474.9 205.9 in alternative fuels for school buses – including electric bus trials
8 July 2020 FirstGroup results for the year to 31 March 2020 21 First Student: response to coronavirus
▪ Contractually paid for daily service typically, therefore negotiating with each of c.1,100 school board customers to agree either full or partial payment during shutdown
▪ Reinforced importance of maintaining driver and operational capability for customers during the crisis by mobilizing industry bodies and sector competitors
▪ So far agreed terms with customers representing 74% of bus fleet; expect to recover c.52% of home-to- school revenue anticipated prior to pandemic
▪ Some customers reducing their level of reimbursement to reflect our ability to mitigate certain labour and fuel costs – adjusting for these our effective recovery rate has increased to c.61%
▪ Not currently assuming charter business recovers at same rate as home-to-school services
▪ First Student utilising CARES Act support available for all businesses
8 July 2020 FirstGroup results for the year to 31 March 2020 22 First Student: the future
Near-term opportunities ▪ Bolt-on M&A of less robust competitors ▪ Contracts potentially available from more challenged competitors in 2020 bid season ▪ Running additional routes to maintain social distancing (if bus capacity can be found) ▪ Driver recruitment / retention issues likely to ease ▪ Additional outsourcing of vehicle fleets or services ▪ Forefront of alternative fuels in our marketplace
Near-term challenges ▪ Agreeing and implementing start-up requirements of each individual school at appropriate time ▪ Managing social distancing on buses ▪ Charter activity expected to take longer to rebuild
Medium-term divisional strategy ▪ Sustainable and resilient returns from our market-leading multi-year contract portfolio in the home-to- school market ▪ Opportunities for organic and M&A-led growth, entry into adjacent markets and provision of complementary services
8 July 2020 FirstGroup results for the year to 31 March 2020 23 First Transit: year in review
▪ Ongoing growth from contract wins and organic progress; continuing to win business in existing markets and adapt to evolution of our markets
▪ Bid discipline maintained – 89% ‘at risk’ contract retention rate includes end of two large but underperfoming contracts
▪ Major contracts in Merced, Arlington, San Bernardino, Chicago and at Los Angeles airport
▪ Targeted recruitment and retention actions and Adj. op back office efficiencies mitigated driver wage $m Revenue inflation profit Mar 2019 1,411.4 64.8 Growth / new business / ▪ Two legal settlements and higher self-insurance 53.8 16.3 pricing charge affected the margin Pay above inflation - (9.2) Insurance - (18.2) ▪ Expansion of paratransit partnership with Lyft Legal settlements - (4.4) to four cities and working on similar arrangement with Uber Inflation / FX / other 33.3 (5.6) Mar 2020 (pre-coronavirus) 1,498.5 43.7 ▪ Continued growth in shared autonomous Coronavirus impact (10.1) (7.5) vehicle (SAV) trials including stackable technology March 2020 1,488.4 36.2
8 July 2020 FirstGroup results for the year to 31 March 2020 24 First Transit: response to coronavirus
▪ Activity levels vary considerably across the division’s sub-segments; negotiating with those customers (c.65% of divisional revenue) where levels have changed meaningfully
▪ Based on agreed terms to date, we expect to recover equivalent of c.79% of revenue anticipated prior to the outbreak
▪ First Transit utilising CARES Act support available for all businesses
▪ Cost efficiencies and capex focus
▪ Transit authorities and other customers beginning to increase service levels in certain sub-segments (on average from 40% below prior levels to 35% currently) as travel restrictions begin to ease
8 July 2020 FirstGroup results for the year to 31 March 2020 25 First Transit: the future
Near-term opportunities ▪ Contracts available from more challenged competitors ▪ Social distancing requiring additional paratransit and other trips ▪ Driver recruitment / retention issues likely to ease ▪ “Jaunt” Mobility as a Service (MaaS) offering launched this summer ▪ Increased interest in transition to autonomous and electric vehicles
Near-term challenges ▪ Potential for reduced demand ▪ Restoration of full services may take some time, particularly for university and airport shuttle ▪ Diminished willingness to invest in future mobility experiments in the short term ▪ Potential for customer funding pressures due to lower tax revenues
Medium-term divisional strategy
▪ Well-established platform to capture long-term growth in evolving transit management markets
▪ Winning MaaS and SAV opportunities and leveraging our partnerships with Transportation Network Companies (TNCs) and others
8 July 2020 FirstGroup results for the year to 31 March 2020 26 Greyhound: year in review
▪ Marketplace was challenging throughout the year with low-cost airline competition and lower fuel prices
▪ Strong demand in Q1 in southern US border states abruptly slowed to five year low due to change in government immigration policy in Q2 and remained at a low level
▪ Commercial team utilising pricing and targeted mileage reductions to prioritise revenue per Adj. op mile and increased capacity optimisation $m Revenue profit Mar 2019 846.7 2.7 ▪ Customer brand perceptions improved over the Revenue (31.9) (31.9) year, driven by increased punctuality and Cost inflation - (16.7) disciplined fleet investments Canada closure (36.7) 7.3 Property gains - 3.9 ▪ Continue to optimise property assets via moves Management actions (3.7) 18.3 to intermodal sites and rezoning Insurance - (6.9) Bus and mileage costs - 5.6 FX / other (0.7) 10.8 Mar 2020 (pre-coronavirus) 773.7 (6.9) Coronavirus impact (7.7) (8.4) Mar 2020 766.0 (15.3)
8 July 2020 FirstGroup results for the year to 31 March 2020 27 Greyhound: response to coronavirus
▪ US CARES Act allocated $326m in emergency funds to US states specifically to support continued intercity bus transportation
▪ Given the unique nature of its scale as the only provider of a national network of coach services across 44 US states, Greyhound is expected to be a significant recipient (currently working through with each state)
▪ Greyhound initially reduced services to c.40% of its pre-outbreak timetabled mileage, sufficient to maintain its community-critical national transportation network
▪ Cost efficiencies and capex focus; closely monitoring demand patterns to shape and size future network
▪ Demand-led restoration of capacity underpinned by government support for vital connections provided by Greyhound’s network
8 July 2020 FirstGroup results for the year to 31 March 2020 28 Greyhound: the future
Near-term opportunities ▪ Reshape and optimize networks as demand increases ▪ Breadth of network offering compared to peers ▪ Core travel purpose – visiting friends and family – to recover faster than business trips, for example
Near-term challenges ▪ Pace of volume recovery and passenger preference ▪ Sustaining network profitability at lower levels of demand ▪ Fuel price vs competition (airlines, private car)
Divisional strategy
▪ Access available intercity bus funding via states
▪ Capture maximum value from our brand and nationwide network
▪ Deliver improved performance potential from revenue, cost and fleet management plans
▪ Continue property rationalisation
▪ Group remains committed to divestment of Greyhound
8 July 2020 FirstGroup results for the year to 31 March 2020 29 First Bus: year in review
▪ Growth in LFL revenue and commercial revenue per mile through improved customer offering and active network management, partially offset by poor summer 2019 weather vs prior year as reported by peers
− As previously indicated, cost efficiency programme savings to offset inflation coming through, but slower than initially planned
▪ Richer data from our digital investments is enhancing network and schedule planning Adj. op decisions £m Revenue profit − Mobile app – first major operator to show real- Mar 2019 876.1 65.1 time capacity (incl. wheelchair space) on each Revenue movements 9.0 9.0 bus; implementation fast-tracked in pandemic Cost inflation - (21.0) − Contactless and mobile now >50% commercial Management actions (1.3) 4.5 ticket revenue (pre-coronavirus, higher since) Fuel - (4.9) Depot disposals (38.5) 2.2 ▪ Importance of buses to local economies being recognised – growth in central government funding Other (0.8) (1.2) and local partnerships (including clean air agenda) Mar 2020 (pre-coronavirus) 844.5 53.7
− Committed to operate a zero-emission fleet Coronavirus (8.6) (7.6) by 2035; do not plan to purchase any new Mar 2020 835.9 46.1 diesel buses after December 2022
8 July 2020 FirstGroup results for the year to 31 March 2020 30 First Bus: response to coronavirus
▪ Initially operated at c.40% of normal capacity to provide for key workers’ transport needs in accordance with an English regional bus-wide funding arrangement with the UK Government
▪ New ‘Restart’ funding announced at end of May to support higher service capacities as lockdown restrictions ease, whilst maintaining social distancing. In June and July respectively, Scotland and Wales committed to further grant packages
▪ Cost efficiencies and capex review; used UK Government’s Job Retention Scheme (JRS) to furlough employees as a condition of the funding agreements with government, but majority are now returning to work as service levels increase
▪ Capacity has recently increased to c.80%, volumes are c.25% of normal but the Restart funding arrangements and commitments to continue paying BSOG, concessionary fares and contract tenders at pre-crisis levels enable First Bus to sustain these levels
8 July 2020 FirstGroup results for the year to 31 March 2020 31 First Bus: the future
Near-term opportunities ▪ Reshape networks in stimulate and capture demand as it increases post-pandemic ▪ Align services/resources to meet changing passenger needs – e.g. shallower morning and evening peaks ▪ Build on leading position in lower emissions buses to transition to zero-emissions public transport ▪ Supportive national and local government policy agenda for modal shift to public transport
Near-term challenges ▪ Managing social distancing on buses ▪ Transitioning from current government-assisted funding model as volumes increase ▪ Passenger travel trends uncertain – working from home, online shopping
Medium-term divisional strategy ▪ Manage transition beyond current industry funding support arrangements ▪ Prioritise partnerships with local authorities ▪ Transition to low- and then zero-emissions fleet ▪ Frictionless customer offering to drive growth ▪ Deliver further benefits from cost efficiency programme
8 July 2020 FirstGroup results for the year to 31 March 2020 32 First Rail: year in review
▪ Focused on delivering service improvements and other commitments for passengers
− GWR implemented largest timetable change in a generation
− Fleet upgrades across several franchises
▪ Award of West Coast Partnership and successful mobilisation and rebranding to Avanti West Coast
▪ Awarded GWR Direct Award for additional three years at end of March 2020
▪ LFL passenger revenue growth +0.2%, passenger volumes (1.3)%
▪ Financial performance driven by GWR and Avanti
▪ Previously reported operational and other challenges in TPE and SWR continued in the year
8 July 2020 FirstGroup results for the year to 31 March 2020 33 First Rail: response to coronavirus
▪ All of the Group’s First Rail franchises are operating under the Emergency Measures Agreements (EMAs) announced by UK government on 23 March 2020:
− UK Government has waived all franchise operator’s revenue, cost and contingent capital risk across the industry until (at least) 20 September 2020
− Operators being paid a fixed management fee based on franchise cost base, with the potential for a small performance-based fee
▪ Group’s remaining contingent capital risk for the rail franchises is £294m in cash (see also slide 52). For the duration of the EMAs the Group does not expect any cash requirement to support the rail franchise operations
▪ Hull Trains open access service currently suspended
8 July 2020 FirstGroup results for the year to 31 March 2020 34 First Rail: the future
Near-term opportunities ▪ Williams Review outcome / opportunity to reset the industry with a better balance of risk and reward ▪ Supportive national policy agenda for modal shift to public transport ▪ Performance incentive fees
Near-term challenges ▪ Managing social distancing ▪ Transition out of Emergency Measures Agreements ▪ Passenger travel trends uncertain
Medium-term divisional strategy
▪ Deliver enhanced services in accordance with our contractual agreements
▪ Work alongside government and industry partners to shape longer term industry structure, focused on passengers
▪ Seek appropriate balance of risk and reward in any future commitments
8 July 2020 FirstGroup results for the year to 31 March 2020 35 Portfolio rationalisation
Remain resolutely committed to and engaged in portfolio rationalisation strategy ▪ No change to Board’s view that sale of these businesses remain best way to unlock material value for all FirstGroup shareholders
▪ Both well-invested long-term contract businesses, market leaders with excellent customer relationships and opportunities for multi-year growth
▪ Formal process to sell First Student and First Transit businesses was launched in March, with receipt of strong interest from a range of potential buyers
▪ In light of the pandemic, the successful conclusion most likely once: − Sufficient clarity on pace and profile of service resumption (incl. schools reopening in North America) − Enabling buyers to have visibility and make an informed assessment of value − Supported by fully functioning leveraged finance markets
Significant opportunities ahead for UK businesses to create sustainable value
8 July 2020 FirstGroup results for the year to 31 March 2020 36 Summary
▪ Group has taken rapid action to respond to the coronavirus pandemic
▪ £850m in liquidity has increased since year end, supported by positive cash from operations in Q1
▪ Significant uncertainties remain, but the importance of public transport has never been more clearly demonstrated
▪ Additional funding and support needs to continue to ensure our services are able to play their integral role in the restoration of economies as we move towards a post-pandemic situation
▪ Committed to and engaged in portfolio rationalisation strategy – confident that sales of the North American divisions remain the best way to unlock value for all FirstGroup shareholders
▪ Long term fundamentals are sound; public transport has a pivotal role to play in supporting vibrant local economies and the transition to a zero-carbon world
8 July 2020 FirstGroup results for the year to 31 March 2020 37 FirstGroup plc Results for the year to 31 March 2020
Appendices
8 July 2020 FirstGroup results for the year to 31 March 2020 Financial results
£m Mar 2020 Mar 2019 Change
Revenue 7,754.6 7,126.9 +8.8% EBITDA1 1,108.9 670.3 +65.4% EBITDA margin % 14.3% 9.4% +490bps Operating profit2 256.8 314.8 (18.4)% Operating profit margin % 3.3% 4.4% (110)bps Net finance costs (146.9) (106.6) +37.8% Profit before tax2 109.9 208.2 (47.2)% Non-GAAP adjustments (409.5) (306.1) n/m Loss before tax (299.6) (97.9) n/m Tax (25.0) (10.1) n/m Loss after tax (324.6) (108.0) n/m Basic EPS p (27.0)p (5.5)p n/m Adjusted EPS p 6.8p 13.3p (48.9)%
1 Adjusted operating profit less capital grant amortisation plus depreciation 2 Before other intangible amortisation charges and certain other items
8 July 2020 FirstGroup results for the year to 31 March 2020 39 Divisional performance
Revenue Operating profit1 Operating margin1 Change Change Change in CCy in CCy in CCy Mar 2020 Mar 2019 Mar 2020 Mar 2019 Mar 2020 Mar 2019
£m First Student 1,940.4 1,845.9 +2.2% 158.8 171.2 (9.4)% 8.2% 9.3% (100)bps First Transit 1,171.4 1,075.8 +5.6% 28.3 49.3 (44.7)% 2.4% 4.6% (220)bps Greyhound 603.2 645.1 (9.4)% (11.6) 2.6 n/m (1.9)% 0.4% (240)bps First Bus 835.9 876.1 (4.6)% 46.1 65.1 (29.2)% 5.5% 7.4% (190)bps Group items 17.8 17.3 +2.9% (33.7) (42.2) (20.1)% Road divisions 4,568.7 4,460.2 0.0% 187.9 246.0 (25.6)% 4.1% 5.5% (140)bps First Rail 3,185.9 2,666.7 +19.5% 68.9 68.8 +0.1% 2.2% 2.6% (40)bps Total Group 7,754.6 7,126.9 +7.2% 256.8 314.8 (20.1)% 3.3% 4.4% (110)bps
$m2 First Student 2,474.9 2,424.9 205.9 227.1 8.3% 9.4% First Transit 1,488.4 1,411.4 36.2 64.8 2.4% 4.6% Greyhound 766.0 846.7 (15.3) 2.7 (2.0)% 0.3% North America 4,729.3 4,683.0 226.8 294.6 4.8% 6.3%
1 Before other intangible amortisation charges and certain other items 2 US Dollar amounts include Canadian Dollars converted at the exchange rates prevailing in either period
8 July 2020 FirstGroup results for the year to 31 March 2020 40 IFRS 16 (Leases)
▪ As at 30 March 2020, £2.5bn of leased assets were recognised as Right Of Use assets on the balance sheet. Rail track access payments, leases of <1 year, low values excluded; no retrospective restatement
Mar 2020 Mar 2019 £m Under IAS17 IFRS 16 effect Under IFRS 16 Under IAS 17 Adjusted EBITDA 619.2 +489.7 1,108.9 670.3 Operating profit 250.4 +6.4 256.8 314.8 Net finance costs (106.7) (40.2) (146.9) (106.6) PBT 143.7 (33.8) 109.9 208.2 EPS 9.0p (2.2)p 6.8p 13.3p Net debt 896.2 +2,381.9 3,278.1 903.4
▪ IFRS 16 effect on adj. op profit less than previously expected due to accounting treatment of rail provisions
▪ As expected, IFRS 16 has a significant impact on headline credit ratios – headline net debt:EBITDA was 3.0x (2019: 1.3x) – however, Group’s key banking covenants are calculated under ‘frozen accounting standards’; on which basis net debt: EBITDA was 1.4x (2019: 1.3x)
▪ Net debt adjusted for Rail ring-fenced cash and IFRS 16 leases: EBITDA was 2.4x (2019: 2.1x)
▪ IFRS 16 has no impact on underlying cash flow; however presentation of cash flow changes
8 July 2020 FirstGroup results for the year to 31 March 2020 41 IFRS 16 (Leases) – Road and Rail
▪ Approximately 90% of the right of use leases recognised are in the Rail division (principally rolling stock), remainder being leased properties, PCVs and other leased assets in the Road divisions − RoU assets capitalised at 31 March 2020 include £1,922m in Rail, £96m in First Student, £60m in First Bus and £40m in Greyhound
▪ This is reflected in the relative effect on depreciation and operating costs in the Rail division compared with the rest of the Group: Mar 2020 Mar 2019 £m Under IAS17 IFRS 16 effect Under IFRS 16 Under IAS 17 EBITDA1 Road divisions 482.7 +87.6 570.3 542.9 First Rail 136.5 +402.1 538.6 127.4 Total Group 619.2 +489.7 1,108.9 670.3 Adjusted2 operating profit Road divisions 180.6 +7.3 187.9 246.0 First Rail 69.8 (0.9) 68.9 68.8 Total Group 250.4 +6.4 256.8 314.8
1 Adjusted operating profit less capital grant amortisation plus depreciation 2 Before other intangible asset amortisation charges and certain other items
8 July 2020 FirstGroup results for the year to 31 March 2020 42 IFRS 16 (Leases) – P&L effects by division
Mar 2020 Mar 2019 £m Under IAS17 IFRS 16 effect Under IFRS 16 Under IAS 17 EBITDA1 First Student 350.2 +37.4 387.6 352.3 First Transit 51.3 +11.6 62.9 71.4 Greyhound 15.7 +19.6 35.3 38.6 First Bus 95.9 +17.3 113.2 119.7 Group items (30.4) +1.7 (28.7) (39.1) Road divisions 482.7 +87.6 570.3 542.9 First Rail 136.5 +402.1 538.6 127.4 Total Group 619.2 +489.7 1,108.9 670.3 Mar 2020 Mar 2019 £m Under IAS17 IFRS 16 effect Under IFRS 16 Under IAS 17 Adjusted operating profit2 First Student 158.0 +0.8 158.8 171.2 First Transit 28.1 +0.2 28.3 49.3 Greyhound (16.3) +4.7 (11.6) 2.6 First Bus 44.6 +1.5 46.1 65.1 Group items (33.8) +0.1 (33.7) (42.2) Road divisions 180.6 +7.3 187.9 246.0 First Rail 69.8 (0.9) 68.9 68.8 Total Group 250.4 +6.4 256.8 314.8 1 Adjusted operating profit less capital grant amortisation plus depreciation 2 Before other intangible asset amortisation charges and certain other items 8 July 2020 FirstGroup results for the year to 31 March 2020 43 Rail cash flow 2019/20 – pre IFRS 16
▪ Rail is cash generative, with profit after tax equating to dividends available for the Group, albeit with some phasing of the funds flows ▪ First Rail “capital expenditure” is typically matched by franchise receipts, capital grants or other funding from third parties, agreed in advance of franchise start
Net Rail cash inflow £m Ring-fenced cash £m Cash from trading Opening ring-fenced cash 525 Rail operating profit 70 Working capital 118 Depreciation 115 Net capital receipts (67) Third party grant amortisation (50) PCS/AFC 10 Franchise payment capital amortisation (51) Franchise Inflow (AWC) 64 14 Other (38) 84 87 Capital expenditure cash flows Closing ring-fenced cash 612 In-year capex spend (115) Franchise payment capital receipts 27 Third party capital grant receipts 21 Net capital receipts (67) Capital payments offset by capital receipts
Working capital/other 10 Temporary timing benefit, to reverse in future years Franchise Inflow 64 AWC Franchise inflow
Net rail cash inflow for 2019/20 91
8 July 2020 FirstGroup results for the year to 31 March 2020 44 Rail cash flow: last five years – pre IFRS 16
Net Rail cash inflow £m Ring-fenced cash £m Cash from trading Opening ring-fenced cash 196 Rail operating profit 327 Working capital 93 Depreciation 413 Net capital receipts (27) Third party grant amortisation (128) PCS/AFC (SWR £49.0m, TPE 112 Franchise payment capital amortisation (227) £42.5m) 58 End of franchise outflows (28) 385 Start of franchise inflows 153 Capital expenditure cash flows Other 113 Cumulative capex spend (483) 416 Franchise payment capital receipts 319 Closing ring-fenced cash 612 Third party capital grant receipts 137 Net capital receipts (27) Capital payments offset by capital receipts;
Working capital/other 114
End of franchise outflows (28) Outflows: First ScotRail £(18)m, FCC £(3)m Start of franchise inflows 153 Inflows: SWR £89m, AWC £64m 125
Net rail cash inflow for 2015/20 597
8 July 2020 FirstGroup results for the year to 31 March 2020 45 Current diesel hedge position
UK North America Year to 31 March 2020/21 2021/22 2022/23 2020/21 2021/22 2022/23
Annual volume (barrels 'm) 1.3m 1.5m 1.4m 0.8m 1.2m 1.4m % hedged 65% 39% 4% 58% 20% 5% Crude rate ($/barrel) $64.42 $65.59 $61.72 $63.26 $65.35 $60.15 Diesel rate ($/barrel) $77.43 $77.69 $73.40 $79.04 $80.98 $76.04 Equivalent cost per litre 36.1p 36.5p 35.0p 49.7c 50.9c 47.8c
First First First Bus First Rail Greyhound Total Student Transit Annual volume (barrels 'm) 0.6m 0.7m 0.5m 0.1m 0.2m 2.1m
▪ Prices include crude and refining cost but exclude delivery margins, duty, taxes and BSOG ▪ Equivalent cost per litre reflects FX hedges placed at $1.35, $1.34 and $1.32 : £1.00 in 2020/21 to 2022/23 ▪ North America annual volume excludes c.2.1m barrels provided by customers or protected by contract escalators
8 July 2020 FirstGroup results for the year to 31 March 2020 46 Foreign exchange
▪ Lower US Dollar compared to prior period balance sheet date: 31 Mar 2020 31 Mar 2019 Closing rate for the balance sheet US$ $1.25 $1.30 Closing rate for the balance sheet CAN$ $1.74 $1.74
▪ Lower US Dollar compared to prior period effective rate: Year to 31 Mar 2020 Year to 31 Mar 2019 Effective rate US$ earnings $1.29 $1.32 Effective rate CAN$ earnings $1.72 $1.74
▪ "Certain” and "highly probable" foreign currency transaction exposures 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 (pounds Sterling), but accepts that reported Group earnings will fluctuate as exchange rates against pounds Sterling fluctuate for the currencies in which the company does business. 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
8 July 2020 FirstGroup results for the year to 31 March 2020 47 Net finance costs and taxation
Net finance costs, £m Mar 2020 Mar 2019 Bonds 56.3 59.9 Bank borrowings 19.6 14.0 Loan notes 1.2 1.1 Senior unsecured loan notes 9.2 8.9 Finance lease interest1 42.6 2.7 Notional interest on long term provisions 12.0 14.6 Notional interest on pensions 8.7 8.1 Investment income (2.7) (2.7) Net finance costs 146.9 106.6
Taxation, £m Mar 2020 Mar 2019 Current tax (0.5) (8.2) Deferred tax (24.5) (1.9) Tax (charge)/credit (25.0) (10.1)
Tax paid (2.9) (7.5)
Tax rate on adjusted profit before tax % 22.4% 22.4%
1 Post IFRS 16, the comparative number under IAS 17 is 2.4.
8 July 2020 FirstGroup results for the year to 31 March 2020 48 EBITDA by division
Revenue EBITDA1 EBITDA margin1 Mar 2020 Mar 2019 Mar 2020 Mar 2019 Mar 2020 Mar 2019
£m First Student 1,940.4 1,845.9 387.6 352.3 20.0% 19.1% First Transit 1,171.4 1,075.8 62.9 71.4 5.4% 6.6% Greyhound 603.2 645.1 35.3 38.6 5.9% 6.0% First Bus 835.9 876.1 113.2 119.7 13.5% 13.7% Group items 17.8 17.3 (28.7) (39.1) Road divisions 4,568.7 4,460.2 570.3 542.9 12.5% 12.2% First Rail 3,185.9 2,666.7 538.6 127.4 16.9% 4.8% Total Group 7,754.6 7,126.9 1,108.9 670.3 14.3% 9.4%
$m2 First Student 2,474.9 2,424.9 496.7 464.5 20.1% 19.2% First Transit 1,488.4 1,411.4 80.0 93.8 5.4% 6.6% Greyhound 766.0 846.7 44.0 49.9 5.7% 5.9% North America 4,729.3 4,683.0 620.7 608.2 13.1% 13.0% 1 Adjusted operating profit less capital grant amortisation plus depreciation 2 US Dollar amounts include Canadian Dollars converted at the exchange rates prevailing in either year
8 July 2020 FirstGroup results for the year to 31 March 2020 49 Capital expenditure
Mar Mar ▪ Disciplined investments principally in £m 2020 2019 vehicle fleet continued during the year Passenger carrying vehicles (PCV) 371.3 408.2 ▪ Leases with a capital value of £560.9m IT including transformation & software 8.4 10.6 entered into in the Road Divisions in the Equipment 26.4 25.4 period Facilities and depot development 10.6 12.6 Acquisitions 27.3 2.3 Road divisions capital investment 444.0 459.1 First Rail 123.1 112.0 Total capital investment 567.1 571.1 Net creditor movement (90.7) (11.5) Funded by operating lease (77.3) (127.1) Gross cash capex 399.1 432.5
8 July 2020 FirstGroup results for the year to 31 March 2020 50 Total capital expenditure and acquisitions
Fixed asset/Software additions Cash (including acquisitions) £m Mar 2020 Mar 2019 Mar 2020 Mar 2019
First Student1 193.0 232.3 256.8 257.8 First Transit 18.8 32.2 16.7 27.3 Greyhound 38.8 31.7 44.1 28.0 First Bus 30.1 25.1 46.3 17.9 First Rail 115.7 110.2 123.1 112.0 Group items 2.7 1.0 2.8 1.0 Total 399.1 432.5 489.8 444.0
▪ In addition, during the year we entered into leases for passenger carrying vehicles and other assets with capital values in First Bus of £6.3m, First Student of £75.1m, Greyhound of £21.3m and First Transit of £13.8m (2019: First Bus £61.9m, First Student £27.0m, Greyhound £34.8m and First Transit £3.4m) ▪ First Rail during the year entered into leases with a discounted present value of £1,719.8m being mainly for rolling stock ▪ Cash capex shown inclusive of £21.8m acquisitions
1 March 2019 includes £2.3m cash and £2.2m fixed asset/software additions for the acquisition of CG Pearson Bus Lines, an Ontario- based provider of school and charter transportation services.
8 July 2020 FirstGroup results for the year to 31 March 2020 51 First Rail commitments and bonds
SWR AWC 31 March 2020, £m GWR TPE 70% 70% FCC Total share share First Rail commitments Parent company support (PCS) and AFC total A 10.0 168.8 82.2 92.4 n/a 353.4 commitment - Of which, unbonded PCS commitment (non-cash) B 5.0 84.4 30.6 35.7 n/a 155.7 - Of which, PCS bond (non-cash) C 5.0 84.4 30.6 35.7 n/a 155.7 Performance bond (non-cash) D 10.0 17.1 11.2 14.0 n/a 52.3 Season ticket bond (cash collateralised) E 34.1 3.0 52.4 5.9 n/a 95.4 Amount of PCS/AFC already committed to TOC F - (42.5) (49.0) - n/a (91.5) Total First Rail bonds (C+D+E) 49.1 104.5 94.2 55.6 n/a 303.5 Group maximum remaining cash exposure n/a 143.4 44.4 106.4 n/a 294.2 (A+D+F)
First Rail ring-fenced cash Ring-fenced cash as at 31 March 2020 265.6 49.8 244.9 50.4 1.3 611.9 ▪ PCS and performance bond (A+D) combined represent the maximum committed funding obligations accruing to the Parent in respect of franchise losses or non-performance over their contract lives. The maximum remaining cash exposure, if the DfT were to return all TOCs to the original franchise terms following the EMA expiry on 20 September 2020 without any rebasing, is therefore the Contingent Capital relating to PCS and Performance Bonds less the £91.5m of funding that has already been provided to the TOCs (F), or £294.2m
− GWR’s PCS and performance bond is excluded from this calculation as the new Direct Award signed in March 2020 makes provision for a revenue rebasing exercise for GWR as required
▪ Monies that cash-collateralise the season ticket bonds are part of the First Rail ring-fenced cash. Ring-fenced cash in First Customer Contact (FCC) is TOC’s cash held for passenger compensation 8 July 2020 FirstGroup results for the year to 31 March 2020 52 Defined Benefit pensions
▪ Broadly flat net pension deficit reflects actions taken to derisk the scheme and improved investment strategy Accounting position as at 31 March 2020 31 March 2019 £m Accounting Accounting Assets Liabilities Offsets surplus/(deficit) surplus/(deficit) First Bus scheme 1,201.3 (1,347.1) - (145.8) (209.0) Group scheme 153.2 (120.4) - 32.8 26.6 First Bus LGPS schemes 1,221.7 (984.7) (216.5)* 20.4 42.7 UK (ex-Rail) total 2,576.2 (2,452.2) (216.5) (92.6) (139.7) First Rail schemes 2,796.2 (4,245.5) 1,447.0 (2.3) (3.1) North America schemes 417.6 (636.1) - (218.5) (164.4) Total Group DB schemes 5,790.0 (7,333.8) 1,230.4 (313.4) (307.2) ▪ The Trustee and Company are in the final stages of agreeing an updated long-term funding plan for the First UK Bus Pension Scheme. Central to this plan is reducing the level of asset risk. The 2019 funding valuation for the LGPS in England was completed during the year, and it showed an improvement in funding position compared to the previous valuation. This has allowed the Company to stop paying additional contributions to the Fund from the end of the 2020-21 financial year, and also enabled the Company to agree a significant level of asset de-risking during the financial year. As a result, overall cash requirements remain broadly in line with recent experience and the risk of continued cash requirements in the longer term is reduced
▪ First Bus and Group schemes benefit from FirstGroup plc funding guarantees. First Bus and Group schemes closed to future accrual, two Local Government Pension Schemes (LGPS) closed to new members
* Irrecoverable surplus
8 July 2020 FirstGroup results for the year to 31 March 2020 53 Pensions
Deficit Cash contributions P&L charge1 £m Mar Mar Mar Mar Mar Mar Mar Mar Mar 2020 2019 2018 2020 2019 2018 2020 2019 2018
North America (218.5) (164.4) (162.7) 20.6 27.2 17.6 8.7 11.1 10.3
First Bus (92.6) (139.7) (108.4) 37.8 43.1 62.4 10.7 34.8 21.5
First Rail (2.3) (3.1) (2.6) 45.6 38.6 31.5 45.7 38.7 31.8
Total (313.4) (307.2) (273.7) 104.0 108.9 111.5 65.1 84.6 63.6
1 Service costs excluding interest for defined benefit schemes
8 July 2020 FirstGroup results for the year to 31 March 2020 54 Liquidity and financing position
▪ Net debt: EBITDA was 1.4x (2019: 1.3x) on banking covenant test basis (which requires <3.75 times) at year end, or 2.4x adjusted for Rail ring-fenced cash and pre-IFRS 16 (2019: 2.1x)
▪ Net debt (ex-IFRS 16 operating leases) £896.2m (2019: £903.4m) at year end, with committed headroom under bank facilities plus free cash: £585.7m (2019: £520.6m). Group also has £150m accordion on bank RCF and other uncommitted undrawn facilities
▪ Undrawn committed liquidity has increased to £850m as at end June, reflecting additional funding measures arranged and the cash performance of the Group in the first quarter of FY21
▪ The Group’s three bonds outstanding have no financial covenants
▪ S&P and Fitch recently reaffirmed BBB- credit ratings, whilst revising outlook to negative from stable
▪ Average maturity of bonds, loan notes and bank facilities is 3.3 years (2019: 4.3 years)
▪ c.70% of net debt denominated in US Dollars; c.50% at fixed interest rates
£400m £350m £325m £200m £300m 8.75% 5.25% 6.875% £200m Apr 2021 Nov 2022 Sept 2024 bond1 bond bond £100m
£0m
H2 '24 H2 '26 H2 H1 H1 '21 H2 '21 H1 '22 H2 '22 H1 '23 H2 '23 H1 '24 H1 '25 H2 '25 H1 '26 H1 '27 H2 '27 H1 '28 H2 '28 Lease finance Bonds Loan notes Private placement notes Bilateral term loan Drawings under RCF 1 The April 2021 bond has been swapped to floating rates and hence has a lower effective rate net of these swaps
8 July 2020 FirstGroup results for the year to 31 March 2020 55 Disclaimer
Certain statements included or incorporated by reference within this presentation may constitute “forward looking statements" in respect of FirstGroup plc's operations, performance, prospects and/or financial condition. Such statements are based on our current expectations and beliefs concerning future events and are subject to a number of known and unknown risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements. Such statements are also based on numerous assumptions regarding our present and future strategy and the environment in which we operate, which may not transpire. We undertake no obligation to update any forward looking statements contained in this presentation or any other forward looking statements we may make.
Nothing in this presentation should be construed as a profit forecast. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser.
Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotions in the UK Financial Services and Markets Act 2000. In making this presentation available, FirstGroup plc makes no recommendation to buy, sell or otherwise deal in shares of FirstGroup plc or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in this presentation in respect of any such investment activity.
8 July 2020 FirstGroup results for the year to 31 March 2020 56