FirstGroup plc Half-yearly results For the six months to 30 - - PowerPoint PPT Presentation

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

FirstGroup plc Half-yearly results

For the six months to 30 September 2016

Tuesday 15 November 2016

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Tim O'Toole Chief Executive

2

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Overview

▪ Providing assistance to those affected by the Tramlink incident on 9 November, and full support to the ongoing investigation ▪ Overall trading as outlined at the start of the year continued during the first half ▪ Encouraging performances by our North American business were partially

• ffset by more challenging trading conditions in the UK

− Net currency benefit expected in H2 from the two-thirds of annual profits generated in North America, if recent currency trends continue ▪ Continue to expect the Group to make good progress with our strategic

• bjectives for the year, recognising likely currency tailwinds but uncertain

UK macroeconomic conditions ▪ H1 cash performance affirms our confidence in generating significantly improved free cash generation for the full year

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Matthew Gregory Chief Financial Officer Financial review

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Financial overview

▪ Adjusted operating profit £89.0m (H1 2015: £88.4m) reflects several factors: − Significant improvement in First Student performance − Rebased First Rail margin under new contracts − Significant currency effects in H1 with favourable translation of North American profits offset by higher costs for fuel in UK; H2-weighted First Student earnings will result in positive FY impact if recent rates are sustained ▪ Adjusted EPS +16.7% ▪ Seasonal net cash outflow improved by £103.8m compared with prior period ▪ Capital expenditure to depreciation (excluding First Rail) at 1.0x in the period ▪ Net debt to EBITDA reduced to 2.4x (H1 2015: 2.6x) ▪ ROCE increased by 100bps to 7.1% at constant exchange rates

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Currency exposure

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1 Before amortisation charges and certain other items. 2 Assumes re-translation of last financial year (12 months to March 2016) at rates prevailing in the 6 months to September 2016 and an H2 rate of $1:25:£1.

North America 58% UK 42%

▪ More than two thirds of FY16 profits from North American divisions ▪ Due to First Student seasonality, favourable currency translation offset by higher UK fuel costs in H1 ▪ Expect FY17 net benefit given H2-weighted profile of First Student, if recent rates are sustained

FY16 revenue FY16 profit1 North America 69% UK 31%

£m impact of H1 currency rates 6m to Sep 2016 12m to Mar 20162 Adjusted1 Operating profit translation effects +2.1 +30.1 UK fuel transaction effect (7.5) (19.3) Net operating profit impact (5.4) +10.8 USD interest (2.2) (4.7) USD tax +1.8 (1.4) Net attributable profit impact (5.8) +4.7 Net EPS impact p (0.5)p +0.4p

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Financial summary

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£m Sep 2016 Sep 2015 Change Change in constant currency1 Revenue 2,564.7 2,440.9 +5.1% (1.0)% Adjusted2

• EBITDA

251.7 242.4 +3.8%

• Operating profit

89.0 88.4 +0.7% (1.7)%

• Margin %

3.5% 3.6% (10)bps Flat

• Net finance costs

(67.1) (66.0) +1.7%

• Profit before tax

21.9 22.4 (2.2)%

• Effective tax rate %

25.1% 24.1% +100bps

• Attributable profit

16.3 14.9 +9.4%

• EPS p

1.4p 1.2p +16.7% Net debt3 1,491.5 1,588.0 (6.1)% (9.3)%

1 Change in constant currency throughout this document is based on retranslating H1 2015 foreign currency amounts at H1 2016 rates 2 Before amortisation charges and certain other items 3 Net debt is stated excluding accrued bond interest

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Revenue performance

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2,440.9 149.1 2,590.0 1.2 15.0 (16.1) (12.7) (13.1) 0.4 2,564.7 H1 2015 revenue Currency H1 2015 constant currency First Student First Transit Greyhound First Bus First Rail Group items H1 2016 revenue Sep 2016 revenue £m Change (constant fx) First Student 719.5 +0.2% First Transit 482.5 +3.2% Greyhound 333.4 (4.6)% First Bus 426.1 (2.9)% First Rail 595.8 (2.2)% Group items 7.4 Total 2,564.7 (1.0)% Reported total +5.1%

▪ Growth in First Student, First Transit and First Rail (like- for-like) ▪ Decreases in Greyhound and First Bus ▪ First Rail reported revenue affected by TPE remapping and reduced subsidy ▪ Significant reported benefit from currency translation

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

88.4 2.1 90.5 18.2 (3.4) (4.4) (2.5) (10.8) 1.4 89.0

H1 2015

• perating

profit Currency H1 2015 constant currency First Student First Transit Greyhound First Bus First Rail Group items H1 2016

• perating

profit

Operating performance

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1 Before amortisation charges and certain other items

Sep 2016

• perating profit1

£m H1 2016 margin1 Margin change (constant fx) First Student 14.0 1.9% +250bps First Transit 30.0 6.2% (90)bps Greyhound 25.8 7.7% (90)bps First Bus 13.5 3.2% (40)bps First Rail 22.1 3.7% (170)bps Group items (16.4) Total 89.0 3.5% Flat Reported total (10)bps Figures include fx impact

• n UK fuel costs of:
• First Bus

£(4.4)m

• First Rail

£(3.1)m

▪ Significant improvement in First Student margin; Rail margin rebased under new contracts ▪ Group margin flat in constant currency ▪ Favourable currency translation offset by higher UK fuel costs in H1

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Capital expenditure

▪ Disciplined reinvestment in passenger carrying fleet and IT upgrade programmes continued during the period ▪ Expect cash capital investment at c.£320m (excl. First Rail) for FY2016/17 − Capital allocation decisions focused increasingly on maintenance of existing asset portfolio and selected growth opportunities with good returns on incremental capital − First Rail capex mainly funded through franchise agreements

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£m Sep 2016 Passenger carrying vehicles (PCV) 119.7 IT including transformation 11.3 Equipment 4.1 Facilities and depot development 3.4 Capital investment excl. First Rail 138.5 First Rail 22.8 Total capital investment 161.3 Net creditor movement 53.2 Funded by operating lease (8.0) Gross cash capex 206.5

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Gross cash capex (206.5) 251.7 (178.0) (28.5) 29.1 (19.8) (11.4) 43.1 (26.1) (81.3) (64.3) EBITDA Non-Rail capex First Rail capex Disposal proceeds Insurance and

• ther provisions

Working capital /

• ther

Operating cash flow Pensions charge in excess of P&L Interest and tax Net cash outflow

Net cash flow (£m)

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Operating cash flow / cash conversion1: Sep 2016: £43.1m / +48% Sep 2015: £(53.2)m / (60)%

1 Operating cash flow divided by Group adjusted operating profit

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Financial position

▪ Strong liquidity and stable financing position with seasonally higher net debt

• f £1,491.5m

− Headroom under committed facilities plus free cash: £824.8m (Mar 2016: £940.2m) − Net debt: EBITDA ratio 2.4x (Sep 2015: 2.6x) − Long term facilities in place – average maturity 3.9 years (Mar 2016: 4.4 years) − Ratings from Standard & Poor's and Fitch currently BBB- and stable outlook − $50m private placement notes repaid Oct 2016 − Next bond maturity Sep 2018, next bank refinancing 2019 ▪ Expect cash interest to remain broadly unchanged until bonds start to mature ▪ Pension deficit £500.3m (Mar 2016: £270.9m) due to lower real discount rates

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Financial summary

▪ Operating profit maintained despite Rail margin rebasing under new contracts, mixed impact of fx and challenging trading environment in some businesses ▪ Seasonal net cash outflow of £64.3m is an improvement of £103.8m compared with prior period ▪ Trading in H1 consistent with expectation of good progress for the Group in the remainder of the year ▪ Continued capital discipline ▪ Highly confident of significant increase in free cash generation for the full year

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Tim O'Toole Chief Executive Business review

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Student

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▪ Robust 2016 bid season – continued progress toward a smaller but higher returning contract portfolio − 7.3% average price increases, 200bps higher than previous season − 80% retention rate, in line with budget ▪ US employment market continues to tighten but better positioned to respond to resulting driver cost inflation ▪ Margin improvement delivered from pricing strategy, additional operating days, cost efficiencies and fuel ▪ Successful school year start up as a result of improved location training and planning ▪ Well positioned to deliver expected margin progress to at least 9% for the full year

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Transit

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▪ Contract awards and organic growth partially offset by lower shuttle activity in Canadian oil sands ▪ Margin affected by business mix and ongoing cost environment in the period ▪ Awarded 12 new contracts and 97% contract retention rate in the period − Includes important wins for future growth (US commuter rail, international) ▪ Continue to execute strategy of enhancing current offering, driving efficiencies and seeking adjacent opportunities ▪ Expecting some growth and margin improvement in H2 and beyond

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Greyhound

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▪ Average at-pump fuel prices c.15% lower through H1, resulting in adverse passenger demand; LFL passenger revenue decrease of 3.9% − Greyhound Express LFL revenue decrease of 0.2% benefitted from strength of

• ur point-to-point offering

▪ Targeted mileage reductions and other cost control measures mitigated the profit impact of lower demand ▪ Encouraging initial results from business model transformation, including transition to one-way pricing and targeted advertising ▪ Outlook remains significantly correlated to fuel price trends, but Greyhound increasingly able to maximise the opportunities afforded by unique brand and scale

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Bus

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▪ Lower high street footfall and congestion issues continue to affect demand across the industry – LFL passenger revenue decreased by 1.3% in H1 ▪ Resulting margin pressure intensified by impact from US dollar-denominated fuel, and not fully offset by cost efficiencies ▪ Aiming to maximise demand through smart ticketing investments, passenger apps and improved reliability ▪ Focusing on contract tender opportunities – successful launch of Vantage in Manchester; signed park and ride in Bristol and Hinkley Point contracts in the period ▪ Continuous review of procurement, lean engineering and other cost saving programmes to mitigate margin impact in light of market conditions

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Rail

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▪ LFL passenger revenue increased by 0.7% − Slowdown in growth seen across the industry exacerbated by the magnitude of the infrastructure upgrades on GWR − TPE revenue performance better than industry average in the period ▪ Margin rebased towards industry norms, as previously indicated ▪ Continue to support Department for Transport and Network Rail to deliver new fleets, infrastructure upgrades and service improvements for passengers ▪ Existing open access operation (Hull Trains) continues to deliver 90%+ passenger satisfaction scores; signed East Coast track access contract in October ▪ Shortlisted with MTR for SWT competition; welcome inclusion of HS2 in future West Coast franchise

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Summary

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▪ Overall trading as outlined at the start of the year continued during the first half ▪ Encouraging performances by our North American business were partially

• ffset by more challenging trading conditions in the UK

▪ Continue to expect the Group to make good progress with our strategic

• bjectives for the year, recognising likely currency tailwinds but uncertain

UK macroeconomic conditions ▪ H1 cash performance affirms our confidence in generating significantly improved free cash generation for the full year

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

FirstGroup plc Half-yearly results

For the six months to 30 September 2016

Tuesday 15 November 2016

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Appendices

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15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Financial results

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£m Sep 2016 Sep 2015 Change Revenue 2,564.7 2,440.9 +5.1% EBITDA1 251.7 242.4 +3.8% EBITDA margin % 9.8% 9.9% (10)bps Operating profit2 89.0 88.4 +0.7% Operating profit margin % 3.5% 3.6% (10)bps Net finance costs (67.1) (66.0) +1.7% Profit before tax2 21.9 22.4 (2.2)% Non-GAAP adjustments (10.8) (29.9) (63.9)% Profit/(loss) before tax 11.1 (7.5) n/m Tax (2.0) 4.4 n/m Profit/(loss) after tax 9.1 (3.1) n/m Basic EPS p 0.7p (0.4)p n/m Adjusted EPS p 1.4p 1.2p +16.7%

1 Adjusted operating profit less capital grant amortisation plus depreciation 2 Before amortisation charges and certain other items

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Non-GAAP adjustments

24

£m Sep 2016 Sep 2015 Amortisation charges (28.5) (27.2) Gain on disposal of property 21.6

• Restructuring and reorganisation costs

(4.2)

• Ineffectiveness on financial derivatives

0.3

• First Bus depot sales and closures
• (1.7)

Legal claims

• (1.0)

Other non-GAAP adjusting items 17.7 (2.7) Total non-GAAP adjustments (10.8) (29.9)

▪ During the period the sale

• f a Greyhound terminal in

San Jose, California was completed which resulted in a gain on sale of £21.6m

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Divisional performance

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1 Before amortisation charges and certain other items 2 US dollar amounts include Canadian Dollars converted at the exchange rates prevailing in either year

Revenue Operating profit1 Operating margin1 Sep 2016 Sep 2015 Sep 2016 Sep 2015 Sep 2016 Sep 2015 £m First Student 719.5 655.9 14.0 2.0 1.9% 0.3% First Transit 482.5 419.2 30.0 30.1 6.2% 7.2% Greyhound 333.4 312.4 25.8 25.8 7.7% 8.3% First Bus 426.1 437.5 13.5 15.4 3.2% 3.5% First Rail 595.8 608.9 22.1 32.9 3.7% 5.4% Group items 7.4 7.0 (16.4) (17.8) Total 2,564.7 2,440.9 89.0 88.4 3.5% 3.6% $m2 First Student 1,004.5 1,006.8 26.2 1.4 2.6% 0.1% First Transit 663.6 645.6 41.4 46.3 6.2% 7.2% Greyhound 457.5 481.6 34.3 40.2 7.5% 8.3% North America 2,125.6 2,134.0 101.9 87.9 4.8% 4.1%

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Student

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1 Before amortisation charges and certain other items

$m Sep 2016 Sep 2015 Change Revenue 1,004.5 1,006.8 (0.2)% Operating profit1 26.2 1.4 n/m Margin % 2.6% 0.1% +250 bps $m Revenue Operating profit1 Sep 2015 1,006.8 1.4 Above inflation pricing 11.6 11.6 Net growth (35.8) (3.8) Management initiatives

• 13.2

Fuel rate (3.0) 8.4 Driver pay above inflation

• (5.7)

Operating days 25.3 10.1 Weather (13.7) (7.2) Inflation, CAN$ fx and other 13.3 (1.8) Sep 2016 1,004.5 26.2

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Transit

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1 Before amortisation charges and certain other items

$m Sep 2016 Sep 2015 Change Revenue 663.6 645.6 2.8% Operating profit1 41.4 46.3 (10.6)% Margin % 6.2% 7.2% (100) bps $m Revenue Operating profit1 Sep 2015 645.6 46.3 Growth / new business 10.9 0.8 Oil sands, inflation, CAN $ fx,

• ther

7.1 (5.7) Sep 2016 663.6 41.4

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Greyhound

28

1 Before amortisation charges and certain other items

$m Sep 2016 Sep 2015 Change Revenue 457.5 481.6 (5.0)% Operating profit1 34.3 40.2 (14.7)% Margin % 7.5% 8.3% (80) bps $m Revenue Operating profit1 Sep 2015 481.6 40.2 Revenue (22.5) (22.5) Fuel cost savings - rate

• 5.9

Management initiatives / cost inflation / other 0.1 10.5 CAN$ fx (1.7) 0.2 Sep 2016 457.5 34.3

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Bus

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1 Before amortisation charges and certain other items

£m Sep 2016 Sep 2015 Change Revenue 426.1 437.5 (2.6)% Operating profit1 13.5 15.4 (12.3)% Margin % 3.2% 3.5% (30) bps £m Revenue Operating profit1 Sep 2015 437.5 15.4 Depot closures (4.1) 4.0 Subtotal 433.4 19.4 Passenger revenue (3.3) (3.3) Cost inflation

• (7.2)

Management initiatives (3.2) 7.0 Fuel cost savings - rate

• 7.4

Fuel fx impact

• (4.4)

Other (0.8) (5.4) Sep 2016 426.1 13.5

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Rail

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1 Before amortisation charges and certain other items

£m Sep 2016 Sep 2015 Change Revenue 595.8 608.9 (2.2)% Operating profit1 22.1 32.9 (32.8)% Margin % 3.7% 5.4% (170) bps

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Foreign exchange

31

£m Sep 2015 Translation impact Sep 2015 constant currency UK fuel impact Non- currency Sep 2016 Revenue 2,440.9 +149.1 2,590.0

• (25.3)

2,564.7

• North American divisions

1,387.5 +147.8 1,535.3

• +0.1

1,535.4

• UK divisions

1,046.4 +1.3 1,047.7

• (25.8)

1,021.9

• Group items

7.0

• 7.0
• +0.4

7.4 Operating profit1 88.4 +2.1 90.5 (7.5) +6.0 89.0

• North American divisions

57.9 +1.5 59.4

• +10.4

69.8

• UK divisions

48.3 +0.6 48.9 (7.5) (5.8) 35.6

• Group items

(17.8)

• (17.8)
• +1.4

(16.4) Margin1 3.6% 3.5% 3.5%

• North American divisions

4.2% 3.9% 4.5%

• UK divisions

4.6% 4.7% 3.5%

1 Before amortisation charges and certain other items

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Rail passenger revenue growth

32

Six months to Sep 2016 Mar 2016 Sep 2015 Mar 2015 Great Western Railway (GWR) (0.1)% 5.4% 6.8% 6.5% TransPennine Express (TPE) 2.0% 5.5% 6.6% 6.5% Hull Trains 6.0% 13.5% 18.7% 15.2% First ScotRail (FSR) n/a n/a n/a 8.1% Total 0.7% 5.6% 7.0% 7.0%

▪ Like-for-like volume decreased by 0.1% in six months to September 2016

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

First Rail ring-fenced cash and bonds

33

First Rail bonds, £m Sep 2016 Sep 2015 GWR performance bond 10.0 10.0 GWR season ticket bond 28.8 26.0 TPE performance bond (old franchise) 4.4 10.6 TPE season ticket bond (old franchise)

• 1.1

TPE season ticket bond (new franchise) 2.2

• TPE performance bond (new franchise)

15.0

• TPE parent company support bond (new franchise)

84.4

• Total

144.8 47.7 ▪ Season ticket bond monies are included within First Rail ring-fenced cash ▪ Performance bonds are non-cash items First Rail ring-fenced cash, £m Sep 2016 Sep 2015 GWR 194.6 151.6 TPE 33.4 45.5 Total 228.0 197.1

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Return on capital employed (ROCE)

34

ROCE As at 30 September 2015 7.1% Foreign exchange (100)bps ROCE at constant currency 6.1% Trading +30bps Balance sheet – including pensions +70bps As at 30 September 2016 7.1%

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Total capital expenditure

35

Cash Fixed asset additions Sep 2016 Sep 2015 Sep 2016 Sep 2015 First Student 97.2 131.8 84.2 108.2 First Transit 6.9 9.2 5.6 7.9 Greyhound 14.9 3.0 6.8 3.7 First Bus 58.7 24.8 33.6 32.1 First Rail 28.5 31.8 22.8 31.3 Group items 0.3 1.3 0.3 1.3 Total 206.5 201.9 153.3 184.5

▪ In addition during the period we entered into operating leases for new vehicles in First Transit with capital value £8.0m (Sep 2015: £1.3m)

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Current diesel hedge position

36

Year to 31 March UK North America 2016/17 2017/18 2018/19 2019/20 2016/17 2017/18 2018/19 2019/20 Annual volume (barrels 'm) 1.8 1.8 1.7 1.2 1.4 1.4 1.4 1.4 % hedged 91% 89% 48% 10% 68% 42% 20% 4% Crude rate ($/barrel) $69.94 $61.08 $56.18 $42.58 $71.64 $58.27 $49.57 $45.35 Diesel rate ($/barrel) $84.48 $75.51 $73.67 $65.00 $94.94 $78.89 $70.40 $70.78 Equivalent cost per litre 40.9p 36.5p 35.6p 31.4p 59.7¢ 49.6¢ 44.3¢ 44.5¢ ▪ Prices include crude and refining cost but exclude delivery margins, duty, taxes and BSOG ▪ Equivalent cost per litre assumes a constant fx rate of $1.30 : £1.00 ▪ North America annual volume excludes c.2.3m barrels provided by customers or protected by contract escalators ▪ The decrease in expected annual volume consumption in 2019/20 reflects the end of the current GWR direct award First Bus First Rail First Student First Transit Greyhound Total Annual volume (barrels 'm) 1.0 0.8 0.7 0.1 0.6 3.2

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Foreign exchange

37

30 Sep 2016 31 Mar 2016 30 Sep 2015 Closing rate for the balance sheet US$ $1.30 $1.41 $1.52 Closing rate for the balance sheet CAN$ $1.71 $1.87 $2.02 ▪ Lower US Dollar compared to March balance sheet date: 6 months to 30 Sep 2016 Year to 31 Mar 2016 6 months to 30 Sep 2015 Effective rate US$ earnings $1.45 $1.49 $1.52 Effective rate CAN$ earnings $2.01 $1.93 $1.78 ▪ Lower US Dollar compared to prior year effective rate: ▪ "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

• rder to keep the currency composition of net debt broadly constant

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Pensions

38

1 Service costs excluding interest for defined benefit schemes

£m Deficit Cash contributions P&L charge1 Sep 2016 Mar 2016 Sep 2015 Sep 2016 Mar 2016 Sep 2015 Sep 2016 Mar 2016 Sep 2015 North America (234.3) (212.5) (130.2) 9.6 20.1 16.3 4.6 7.6 3.0 First Bus (263.4) (57.5) (27.2) 29.3 41.6 25.7 8.2 20.2 10.4 First Rail (2.6) (0.9) (0.7) 10.4 27.1 13.1 10.4 27.4 13.1 Total (500.3) (270.9) (158.1) 49.3 88.8 55.1 23.2 55.2 26.5

▪ Group deficit increased by £229.4m principally due to lower net discount rates in the UK and North America

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

£0m £50m £100m £150m £200m £250m £300m £350m £400m FY 16/17 H1 17/18 FY 17/18 H1 18/19 FY 18/19 H1 19/20 FY 19/20 H1 20/21 FY 20/21 H1 21/22 FY 21/22 H1 22/23 FY 22/23 H1 23/24 FY 23/24 H1 24/25 FY 24/25 Lease finance Private placement notes Bonds Loan notes Drawings under RCF

Debt profile

39

£300m 8.125% Sept 2018 bond £250m 6.125% Jan 2019 bond1 £350m 8.75% Apr 2021 bond1 £325m 5.25% Nov 2022 bond £200m 6.875% Sept 2024 bond

1 The 2019 and 2021 bonds have been swapped to floating rates and hence have a lower effective rate net of these swaps

▪ Headroom under committed facilities plus free cash: £824.8m (Mar 2016: £940.2m): − £745m (Mar 2016: £800m) of undrawn under committed bank revolver expiring June 2019 − Free cash of £79.8m (Mar 2016: £140.2m) excludes First Rail and other ring-fenced cash and deposits of £230.7m (Mar 2016: £219.9m) ▪ Average debt maturity 3.9 years (Mar 2016: 4.4 years)

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

Net finance costs and taxation

40

Net finance costs, £m Sep 2016 Sep 2015 Bonds 42.1 42.1 Bank borrowings 6.8 6.3 Loan notes 0.5 0.5 Senior unsecured loan notes 2.3 2.1 Finance lease interest 3.4 4.4 Notional interest on long term provisions 7.9 7.2 Notional interest on pensions 4.8 4.0 Investment income (0.7) (0.6) Net finance costs 67.1 66.0 Taxation, £m Sep 2016 Sep 2015 Current tax 1.8 1.1 Deferred tax 0.2 (5.5) Tax charge/(credit) 2.0 (4.4) Tax paid 5.1 4.4 Tax rate on adjusted profit before tax 25.1% 24.1%

15 November 2016 FirstGroup half-yearly results for the six months to 30 September 2016

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

• ur 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.

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