Annual Report and Accounts 2009 Operating and Financial Review Financial Statements

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Annual Report and Accounts 2009 Operating and Financial Review Financial Statements ANNUAL REPORT AND ACCOUNTS 2009 OPERATING AND FINANCIAL REVIEW FINANCIAL STATEMENTS 2 Group overview 52 Consolidated income statement 4 Measuring our performance 53 Consolidated statement against our strategy of recognised income 5 Chairman’s statement and expense 7 Chief Executive’s 54 Consolidated balance sheet operating review 55 Consolidated cash flow 26 Finance Director’s review statement 56 Notes to the consolidated financial statements 98 Independent auditors’ report 100 Group financial summary 101 Company balance sheet REPORT OF THE DIRECTORS 102 Notes to the Company financial statements 32 Board of Directors 108 Independent auditors’ report 34 Corporate governance 109 Glossary 42 Directors’ remuneration report 110 Shareholder information 48 Directors’ report 111 Financial calendar 51 Directors’ responsibilities 112 Find out more about First FIRSTGROUP PLC OPErating AND FINANCIAL REVIEW About First FirstGroup plc is the leading transport operator in the UK and North America with annualised revenues of over £6 billion a year. We employ some 136,000 staff throughout the UK and North America and transport more than 2.5 billion passengers a year. Our core values of safety and customer service are at the heart of our business and underpin everything we do. There is no higher priority than the safety and security of our passengers and our staff. FirstGroup Annual Report and Accounts 2009 1 FIRSTGROUP PLC Group overview TRANSFORMING TRAVEL OUR VALUES First wants to lead the way in transforming the Our core values, which underpin way people travel and the way they feel about everything that we do, are: public transport. • Safety: By aiming for the top in everything we do – and If you cannot do it safely – don’t do it! helping each other – we can deliver the highest • Customer service: levels of safety and service and give greater Delivering our promise. customer and employee satisfaction. FIRST STUDENT FIRST TRANSIT FIRST SERVICES GREYHOUND S E SS E BUSIN NORTH AMERICA: We built on the success of our North American business with the acquisition of Laidlaw International, Inc. This transformational acquisition established us as the market leader in North America and gives us the scale and opportunities to generate increased value and returns and create a solid platform for future growth. The four FirstGroup America businesses – First Student, First Transit, First Services and Greyhound – operate across the US and Canada. First Student is the largest provider First Transit is one of the largest First Services is the largest private Greyhound is the only national of student transportation in North private sector providers of transit sector provider of vehicle maintenance provider of scheduled intercity coach America with a fleet of approximately management and contracting, and ancillary support services in the transportation services in both the 60,000 yellow school buses, carrying managing public transport systems US. We provide fleet maintenance for US and Canada. Based in Dallas, 4 million students every day across on behalf of city transit authorities. public sector customers such as the Greyhound provides scheduled the US and Canada. We are one of the largest providers Federal Government, cities and fire and passenger services to approximately of airport shuttle bus services in the police departments. We also provide 3,100 destinations throughout the US US and also manage call centres, a range of support services including and Canada carrying over 22 million paratransit operations and other light vehicle maintenance, logistics support passengers annually. transit activities. and facilities management to public and private sector clients including the ABOUT US US Navy and US Air Force. 60,000 Operates some Maintains over 3,100 yellow school buses 7,000 buses 50,000 vehicles destinations 4m Manages and operates in Operates in 22m students to and from passengers school every day 235 locations 150 locations per year Y STATISTICS 68,000 15,500 3,500 9,000 E employees employees employees employees K FIND OUT MORE ON PAGE 9 FIND OUT MORE ON PAGE 11 FIND OUT MORE ON PAGE 11 FIND OUT MORE ON PAGE 12 2 FirstGroup Annual Report and Accounts 2009 OPErating AND FINANCIAL REVIEW REVENUE ADJUSTED OPERATING PROFIT1 UK Bus £1,182.0m UK Bus £134.0m UK Rail £2,121.5m UK Rail £94.2m North America £2,224.1m North America £246.1m Greyhound £642.4m Greyhound £48.5m Other £17.3m 1 Excludes £25.3m of Group items UK BUS UK RAIL S E SS E BUSIN We are the UK’s largest bus operator running more than one in five of all local We are the UK’s largest rail operator, running nearly a quarter of the passenger bus services. A fleet of nearly 9,000 buses carries some 3 million passengers rail network and carrying over 285 million passengers a year. a day in more than 40 major towns and cities. We have a strong, balanced portfolio and we are the only operator to run every The majority of our operations are in urban areas where the bus is the most type of overground rail service in the UK, from high speed intercity trains and effective means of tackling traffic congestion. We continue to develop and overnight sleeper services to local branch lines, regional and commuter services promote effective partnerships and we are working with local authorities and and open access, light rail and freight operations. other stakeholders to provide punctual and reliable services for our customers through Punctuality Improvement Partnerships, bus priority and other traffic We operate four passenger rail franchises – First Capital Connect, First Great management schemes. Western, First ScotRail and First TransPennine Express – and one open access operator, First Hull Trains. We also operate rail freight services through First GBRf, and operate the Croydon Tramlink network on behalf of Transport for London carrying nearly 28 million passengers a year. ABOUT US 3m 285m passengers every day passengers a year We operate more than We operate one quarter one in five of all local 26,500 of the UK passenger 13,500 bus services employees rail network employees Y STATISTICS E K FIND OUT MORE ON PAGE 13 FIND OUT MORE ON PAGE 17 FirstGroup Annual Report and Accounts 2009 3 FIRSTGROUP PLC Measuring our performance against our strategy We are the leading transport operator in the UK and North America. Our strategy is to provide safe, reliable, innovative and sustainable services and to increase shareholder value through profitable growth in our core markets. The continued strength and resilience of the Group is the result of our strategy to build a balanced portfolio of operations. The Group continues to benefit 31.4% 38.2% 26% from a diverse revenue stream increase in revenue increase in adjusted reduction in which is balanced between to £6,187.3m operating profit to £497.5m Lost Time Injuries contract-backed and passenger revenues. It is this diversity that mitigates the impact of an uncertain economic environment. Together with the management actions we have 37.7% 18.8% >90% already started to implement, increase in adjusted increase in adjusted basic contract retention the Group will continue to build EBITDA to £772.2m earnings per share to 48.6p in First Student on its market leading position and deliver a strong operating and trading performance. 2009 2008 Revenue (£m) 6,187.3 4,707.6 Adjusted operating profit1 (£m) 497.5 360.1 Operating profit (£m) 371.1 267.5 Adjusted profit before taxation1 (£m) 326.4 249.0 Profit before taxation (£m) 200.0 151.9 Adjusted basic EPS1 (pence) 48.6 40.9 Basic EPS (pence) 30.2 27.7 Adjusted EBITDA2 (£m) 772.2 560.8 Adjusted EBITDA: interest cover3 4.5x 5.0x Net debt4 (£m) (2,503.5)5 (2,161.0) 1 Before amortisation charges, non-recurring bid costs, other non-recurring items and profit on disposal of properties 2 Adjusted operating profit plus depreciation 3 Adjusted EBITDA divided by the net of finance costs and investment income 4 Net debt is stated excluding accrued interest 5 After adverse foreign exchange movements of £614.9m Results for the year to 31 March 2009 include a full year contribution from the Laidlaw businesses compared to only a six month contribution in 2008 4 FirstGroup Annual Report and Accounts 2009 MARTIN GILBERT OPErating AND FINANCIAL REVIEW Chairman’s statement I am delighted to report another strong performance from the Group, delivering continued growth and solid results despite the more challenging economic backdrop. While the current macro-economic conditions present short term Across our business trading has been strong. Adjusted basic challenges they also highlight the strength and resilience of our earnings per share increased by 18.8% to 48.6p (2008: 40.9p). business. As a result of our strategy to build a balanced portfolio The Board is recommending a final dividend, subject to approval of operations we now have some 50% of Group revenues secured by shareholders, of 12.7p making a full year payment of 18.75p, an under medium term contracts providing a visible revenue stream increase of 10%. It will be paid on 21 August 2009 to shareholders and insulation against a fast changing economic environment. Our on the register on 17 July 2009. In line with the Board’s previously strategy to deliver long term sustainable growth in the UK and North stated dividend commitment, this is now the fifth consecutive year America has ensured that the Group is not solely dependent on one that we have increased dividends by 10%, representing an increase market or operating division. of £8.2m in the year on a like for like basis and is supported by strong performance in the year from the Group’s resilient and stable We have a clear strategy to provide safe, high quality and reliable portfolio of operations.
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