FirstGroup plc Results for the year to 31 March 2020 Wednesday 8 - PowerPoint PPT Presentation

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 impact 1 in CCy Revenue 7,754.6 7,126.9 +8.8% +7.2% Adjusted 2 - 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 debt 3 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 Mar 2019 Currency Mar 2019 Student Transit Greyhound First Bus First Rail Group Mar 2020 Coronaviru Mar 2020 sub-total baseline items revenue revenue First s impact First 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 6.5 332.9 321.3 6.4 8.4 303.9 (18.1) 21.2 (4.2) (17.1) (12.8) 256.8 (12.9) (53.5) adj. op. profit Currency amortisation Mar 2019 First Student First Transit Greyhound Group items Mar 2020 IFRS 16 (op Coronavirus adj. op. profit baseline sub-total First Bus First Rail Software Mar 2019 Mar 2020 leases) impact 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 (106.6) +37.8% (146.9) of transition to IFRS 16 Profit before tax 109.9 208.2 (47.2)% (48.2)% Tax (24.6) (46.6) 22-23% tax rate - Effective tax rate % 22.4% - 22.4% 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 ▪ Greyhound impairments and North American H1 FY £m insurance provisions discussed overleaf 2020 2020 ▪ 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) ▪ Restructuring and reorganisation of which a large part North America insurance provisions (59.3) (141.3) 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 associated with the proposed rationalisation of the Increase in SWR performance bond - (1.1) Group Profit on Greyhound property disposals - 1.3 ▪ First Transit legacy pension settlement: relates to a Profit on Student property disposals - 8.0 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