FirstGroup plc Full year results For the twelve months to 31 March - - PowerPoint PPT Presentation

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

FirstGroup plc Full year results

For the twelve months to 31 March 2016

Tuesday 14 June 2016

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Tim O'Toole Chief Executive

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Overview

▪ Solid progress made in the year for future growth and higher returns ▪ Operating profit maintained despite smaller rail portfolio and challenging trading environment in some businesses ▪ Contract portfolio enhanced with TransPennine Express rail award and

• ther wins across the Group

▪ Continued disciplined bidding and cost efficiencies, as well as lower fuel costs and additional First Student operating days expected to result in strong progress for the Group in the year ahead ▪ Significantly increased cash generation expected in 2016/17

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Matthew Gregory Chief Financial Officer Financial review

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Financial overview

▪ Adjusted operating profit £300.7m (2015: £303.6m) reflects several factors: − Changes to First Rail franchise portfolio − Fewer operating days in First Student due to timing of school calendar − Change in the basis of estimate for First Rail pensions ▪ Net cash inflow of £36.0m before First Rail end of franchise outflows of £20.8m, ahead of expectations ▪ Net debt to EBITDA flat at 2.3x (2015: 2.3x) ▪ Consistent level of capital investment, excluding First Rail, at £348m (2015: £349m) ▪ Adjusted EPS +5.1% ▪ ROCE 7.2% (2015: 7.4% at constant exchange rates). After adjusting for the impact

• f the items above, ROCE increased by 60 basis points

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Financial summary

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£m Mar 2016 Mar 2015 Change

• Underlying1 revenue

5,218.1 5,232.3 (0.3)% Adjusted2

• Revenue

5,218.1 6,050.7 (13.8)%

• EBITDA3

615.9 624.4 (1.4)%

• Operating profit

300.7 303.6 (1.0)%

• Margin %

5.8% 5.0% +80bps

• Net finance costs

(132.4) (139.7) (5.2)%

• Profit before tax

168.3 163.9 +2.7%

• Effective tax rate %

23.0% 22.0% +100bps

• Attributable profit

123.5 117.5 +5.1%

• EPS p

10.3p 9.8p +5.1%

1 In constant currency and adjusted for changes in First Rail franchise portfolio 2 Before amortisation charges and certain other items 3 Adjusted operating profit less capital grant amortisation plus depreciation

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Divisional performance

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Mar 2016 revenue Mar 2016 operating profit1 £m Change (Constant FX) £m Change (Constant FX) Margin1 Change in margin1 First Student 1,553.5 +0.3% 112.6 (5.5)% 7.1% (40)bps First Transit 864.8 (2.1)% 60.1 (3.2)% 7.0% (10)bps Greyhound 605.1 (4.8)% 35.5 (21.5)% 6.0% (90)bps First Bus 870.9 (2.8)% 52.0 +11.6% 6.0% +20bps First Rail 1,308.4 (40.7)% 72.9 +6.7% 5.6% +220bps Group items 15.4 (32.4) Total 5,218.1 (15.6)% 300.7 (0.7)% 5.8% +80bps Total at actual FX (13.8)% (1.0)%

1 In local currency before amortisation charges and certain other items

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Income statement – continued

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£m Mar 2016 Mar 2015 Change Adjusted1 Operating profit 300.7 303.6 (1.0)% Net finance costs (132.4) (139.7) (5.2)% Profit before tax 168.3 163.9 +2.7% Tax (38.7) (36.1) +7.2%

• Effective tax rate %

23.0% 22.0% +100bps Non-controlling interests (6.1) (10.3) (40.8)% Attributable profit 123.5 117.5 +5.1% EPS p 10.3p 9.8p +5.1%

1 Before amortisation charges and certain other items

P&L tax rate to increase further No TPE minority

• n new franchise

Broadly flat, principally bonds

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Financial position

▪ Strong liquidity and stable financing position with net debt of £1,410m − Headroom under committed facilities plus free cash: £940.2m (Mar 2015: £1,023.8m) − Net debt:EBITDA ratio 2.3x (Mar 2015: 2.3x) − Long term facilities in place – average maturity 4.4 years (Mar 2015: 5.2 years) − Ratings from Standard & Poors' and Fitch currently BBB- and stable outlook − $50m private placement notes to be repaid Oct 2016 − Next bond maturity Sept 2018, next bank refinancing 2019 ▪ Expect cash interest to remain broadly unchanged until bonds start to mature ▪ Continuously review opportunities to optimise financing structure and costs

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Capital expenditure

▪ Disciplined reinvestment in passenger carrying fleet and IT upgrade programmes continued during the year ▪ Capital investment at 1.2x depreciation (excl. First Rail) ▪ Going forward, capital allocation decisions focused increasingly on maintenance of existing asset portfolio and selected growth opportunities with good returns on incremental capital ▪ Expect capital investment (excl. First Rail) to decrease in 2016/17 − First Rail capex mainly funded through franchise agreements ▪ ROCE continues to improve over time

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£m Mar 2016 Passenger carrying vehicles (PCV) 282.7 IT including transformation 28.9 Facilities and depot development 18.2 Equipment 18.1 Capital investment excl. First Rail 347.9 First Rail 65.4 Total capital investment 413.3 Net creditor movement (6.8) Funded by operating lease (1.3) Gross cash capex 405.2

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Gross cash capex (405.2)

Net cash flow (£m)

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615.9 (347.1) (58.1) 19.5 (18.6) (19.6) 192.0 (33.6) (122.4) 36.0 (20.8) 15.2 EBITDA Non-Rail capex First Rail capex Disposal proceeds Provisions Working capital /

• ther

Operating cash flow Pensions charge in excess of P&L Interest and tax Cash outflow before First Rail franchise outflows First Rail end of franchise outflows Net cash flow

Operating cash flow / cash conversion1: Mar 2016: £192.0m / 64% Mar 2015: £176.1m / 58%

1 Operating cash flow divided by Group adjusted operating profit

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Financial summary

▪ Operating profit maintained despite smaller rail portfolio and challenging trading environment in some businesses ▪ Net cash inflow for the year (before end of rail franchise outflows) ahead of expectations at £36.0m ▪ Continued disciplined bidding and cost efficiencies, as well as lower fuel costs and additional First Student operating days expected to result in strong progress for the Group in the year ahead ▪ Continued capital discipline ▪ Significantly increased cash generation expected in 2016/17

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Tim O'Toole Chief Executive Business review

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Student

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Multi-year strategy

• Contract portfolio pricing programme to raise returns
• Cost efficiencies
• Double digit medium term margin target

2015/16

• 2015 bid season: 5.3% average price increase and 86% retention
• $14m cost efficiencies achieved from driver productivity, fuel efficiency,

engineering savings and other applications of consistent best practice

• Earnings improvement held back by worsening industry-wide driver

shortage challenges in some regions

• Recently realigned regional and central services structures (130

positions eliminated) to generate savings in year ahead Year ahead

• Driver cost challenges being incorporated into 2016 bid pricing
• Further cost efficiency actions underway
• Benefit from elimination of the c.$17m operating days impact in

2015/16 and lower fuel costs

• Despite driver shortage headwinds, significant margin progress

expected in 2016/17, to at least 9%

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Transit

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Multi-year strategy

• Growth through bidding for further outsourcing opportunities
• Maintain margin of c.7% and relatively low capital intensity

2015/16

• Extensive scale and management expertise rewarded with 18 new

contracts and 90% retention rate

• Now operating almost 350 contracts across fixed route, paratransit,

vehicle maintenance and shuttle segments

• Investing to sustain competitive advantage and cost efficiency –

real-time information, predictive analytics, paperless workshops

• Significant decline in Canadian oil sands activity as a result of oil price

Year ahead

• Bid pipeline strengthening with a broad range of growth opportunities
• Continue to explore options in adjacent services and new geographies
• Continued challenges in Canadian oil sands region due to low levels of

activity

• Aim to maintain attractive margins given modest capital requirements
• First Student to leverage First Transit Vehicle Maintenance Services

engineering expertise

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Greyhound

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Multi-year strategy

• Fleet upgrade and roll out of point-to-point services
• Transformation of Greyhound business model
• 12% margin target

2015/16

• Progress transforming traditional Greyhound's systems – real-time

pricing, yield management, upgraded website, new apps, bus tracking

• Lower demand from fuel prices but trend moderated over the year:

− Q4 divisional revenue -2.1% with flat point-to-point revenues

• Flexible cost model mitigating margin impact of lower demand
• Greyhound Canada: mileage and cost base significantly reduced but

remains loss making; determining most appropriate plan to resolve

• Domestic services in Mexico launched

Year ahead

• Continue to flex operations in response to muted passenger demand

environment

• Benefits from new commercial model to build over time
• Build on Mexico launch; improve returns in Greyhound Canada

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Bus

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Multi-year strategy

• Restore volume growth and ability to achieve market-based pricing
• Cost efficiencies
• Double digit medium term margin target

2015/16

• Maintained focus on fleet and passenger technology investments,

improving service performance and partnerships with local authorities

• Continue to optimise fare baskets, networks and timetables in

response to local demand

• Lower high street footfall, weather and congestion issues in some

markets resulted in disappointing volumes across the industry in H2

• Depot consolidation and other cost efficiencies expanded to protect

margin from lower patronage – savings of £23m delivered in 2015/16 Year ahead

• Market conditions expected to remain challenging in the year ahead
• Moderate margin progression expected from full year benefits of past

cost actions, additional efficiency initiatives and fuel hedging

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Rail

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Multi-year strategy

• Passenger volume growth and operational delivery
• Disciplined approach to franchise bidding opportunities

2015/16

• Good passenger volume and revenue growth coupled with strong

financial performance overall

• Supporting Department for Transport and Network Rail to deliver

infrastructure upgrades and other improvements for passengers

• Successful mobilisation and rebrand launch on new TPE franchise
• Maintaining bid discipline in a range of franchise opportunities
• New East Coast open access services to commence by 2021

Year ahead

• Expecting passenger revenue growth to moderate in line with industry-

wide slowdown in growth

• Margin to rebase toward industry norms with new TPE franchise terms
• Bidding approach balances ambitious improvements for passengers

and appropriate returns for shareholders, at an acceptable level of risk

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Summary

▪ Transformation plans have had to adapt to changing environment ▪ Group today is better invested, with improving cost structure, strengthened management capability and opportunities to grow by tailoring services to customers' needs ▪ Repositioned to generate sustainable cash generation and returns going forward ▪ Continued disciplined bidding and cost efficiencies, as well as lower fuel costs and additional First Student operating days expected to result in strong progress for the Group in the year ahead ▪ Significantly increased cash generation expected in 2016/17

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

FirstGroup plc Full year results

Tuesday 14 June 2016

For the twelve months to 31 March 2016

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Appendices

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14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Financial results

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£m Mar 2016 Mar 2015 Change Revenue 5,218.1 6,050.7 (13.8)% EBITDA1 615.9 624.4 (1.4)% EBITDA margin % 11.8% 10.3% +150bps Operating profit2 300.7 303.6 (1.0)% Operating profit margin % 5.8% 5.0% +80bps Net finance costs (132.4) (139.7) (5.2)% Profit before tax2 168.3 163.9 +2.7% Non-GAAP adjustments (54.8) (58.1) (5.7)% Profit before tax 113.5 105.8 +7.3% Tax (17.1) (20.3) (15.8)% Profit after tax 96.4 85.5 +12.7% Basic EPS p 7.5p 6.2p +21.0% Adjusted EPS p 10.3p 9.8p +5.1%

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

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Non-GAAP adjustments

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£m Mar 2016 Mar 2015 Amortisation charges (51.9) (54.3) Pensions past service gain 10.8

• Insurance reserve

(10.5)

• First Bus depot sales and closures

(1.8) (7.5) Legal claims (1.0) (12.2) Ineffectiveness on financial derivatives (0.4) (0.3) Gain on disposal of property

• 25.3

IT licenses

• (8.7)

Other

• (0.4)

Other non-GAAP adjusting items (2.9) (3.8) Total non-GAAP adjustments (54.8) (58.1) ▪ Pensions past service gain – we have agreed with the FirstGroup Pension Scheme Trustee to change the basis for revaluing pensions in payment from RPI to CPI. This change has led to a reduction in the liabilities which is treated in the income statement as a past service gain ▪ Insurance reserve – there have been significant adverse developments on a small number of old and unusual insurance claims in North America during the year. The impact of these adverse developments was a charge

• f £10.5m

▪ Legal claims charge relates to a claim that pre-dates the Laidlaw acquisition ▪ First Bus depot sales and closures in the period relate to operating losses

• n a legacy depot closure

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Divisional performance

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Revenue Operating profit1 Operating margin1 Mar 2016 Mar 2015 Mar 2016 Mar 2015 Mar 2016 Mar 2015 £m First Student 1,553.5 1,478.8 112.6 114.9 7.2% 7.8% First Transit 864.8 844.8 60.1 59.7 6.9% 7.1% Greyhound 605.1 609.6 35.5 41.7 5.9% 6.8% First Bus 870.9 896.1 52.0 51.8 6.0% 5.8% First Rail 1,308.4 2,207.1 72.9 74.1 5.6% 3.4% Group items 15.4 14.3 (32.4) (38.6) Total 5,218.1 6,050.7 300.7 303.6 5.8% 5.0% $m2 First Student 2,332.7 2,368.6 165.0 177.3 7.1% 7.5% First Transit 1,303.4 1,362.1 90.6 96.1 7.0% 7.1% Greyhound 914.0 986.0 54.4 68.5 6.0% 6.9% North America 4,550.1 4,716.7 310.0 341.9 6.8% 7.2%

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

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Student

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$m Mar 2016 Mar 2015 Change Revenue 2,332.7 2,368.6 (1.5)% Operating profit1 165.0 177.3 (6.9)% Margin % 7.1% 7.5% (40)bps $m Revenue Operating profit1 Mar 2015 2,368.6 177.3 Above inflation pricing 20.9 20.9 Net growth and exit costs (60.6) (11.1) Weather 13.6 10.4 Operating days (38.8) (16.7) Driver related costs

• (22.4)

Management initiatives 1.2 14.3 Inflation/other 72.8 (4.5) CAN$ fx (45.0) (3.2) Mar 2016 2,332.7 165.0

1 Before amortisation charges and certain other items

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Transit

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$m Mar 2016 Mar 2015 Change Revenue 1,303.4 1,362.1 (4.3)% Operating profit1 90.6 96.1 (5.7)% Margin % 7.0% 7.1% (10)bps $m Revenue Operating profit1 Mar 2015 1,362.1 96.1 Canadian oil sands (39.0) (4.2) Inflation/actions/growth/other 9.9 1.4 CAN$ fx (29.6) (2.7) Mar 2016 1,303.4 90.6

1 Before amortisation charges and certain other items

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Greyhound

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$m Mar 2016 Mar 2015 Change Revenue 914.0 986.0 (7.3)% Operating profit1 54.4 68.5 (20.6)% Margin % 6.0% 6.9% (90)bps $m Revenue Operating profit1 Mar 2015 986.0 68.5 Passenger revenue (46.2) (46.2) Fuel cost savings – rate

• 17.1

Management actions (incl. mileage)

• 40.4

Yield management costs

• (6.4)

Inflation/other

• (19.7)

CAN$ fx (25.8) 0.7 Mar 2016 914.0 54.4

1 Before amortisation charges and certain other items

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Bus

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£m Mar 2016 Mar 2015 Change Revenue 870.9 896.1 (2.8)% Operating profit1 52.0 51.8 +0.4% Margin % 6.0% 5.8% +20bps £m Revenue Operating profit1 Mar 2015 896.1 51.8 Revenue growth 1.2 1.2 Cost inflation

• (16.9)

Tender changes (8.5) (4.6) Management initiatives (8.6) 22.9 Games/other (9.3)

• Restructuring costs
• (2.4)

Mar 2016 870.9 52.0

1 Before amortisation charges and certain other items

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Rail

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£m Mar 2016 Mar 2015 Change Revenue 1,308.4 2,207.1 (40.7)% Operating profit1 72.9 74.1 (1.6)% Margin % 5.6% 3.4% +220bps

1 Before amortisation charges and certain other items

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Rail passenger revenue growth

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Mar 2016 Mar 2015 Great Western Railway (GWR) 6.1% 6.7% TransPennine Express (TPE) 6.0% 6.4% Hull Trains 15.8% 12.8% First Capital Connect (FCC) n/a 6.8% First ScotRail (FSR) n/a 6.5% Total 6.3% 6.7% ▪ Continued solid demand across all of our franchises – like-for-like volume growth of 2.9%

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

First Rail ring-fenced cash and bonds

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First Rail bonds, £m Mar 2016 Mar 2015 GWR performance bond 10.0 10.0 GWR season ticket bond 28.8 21.4 FTPE performance bond 4.4 10.6 FTPE season ticket bond

• 1.1

FSR performance bond

• 25.0

Total 43.2 68.1 ▪ Season ticket bond monies are included within First Rail ring-fenced cash ▪ Performance bonds are contingent liabilities First Rail ring-fenced cash, £m Mar 2016 Mar 2015 GWR 177.2 148.8 FTPE 40.3 42.9 FSR

• 4.3

Total 217.5 196.0

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Return on capital employed (ROCE)

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ROCE As at 31 March 2015 7.8% Foreign exchange (0.4%) ROCE at constant FX 7.4% Changes in First Rail franchise portfolio (0.6%) First Student operating days (0.3%) Change in basis of estimate for First Rail pensions 0.1% 6.6% Growth/tax rate/other 0.6% As at 31 March 2016 7.2%

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Total capital expenditure

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£m Cash Fixed asset additions Mar 2016 Mar 2015 Mar 2016 Mar 2015 First Student 245.7 174.9 209.2 170.4 First Transit 20.5 21.6 19.1 21.1 Greyhound 21.1 49.8 24.8 50.9 First Bus 57.6 104.1 91.3 93.9 First Rail 58.1 75.0 65.4 76.1 Group items 2.2 3.5 2.2 3.5 Total 405.2 428.9 412.0 415.9 ▪ In addition during the year we entered into operating leases for new vehicles in First Transit with capital value £1.3m (2015: £9.2m)

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Current diesel hedge position

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Year to 31 March UK North America 2016 2017 2018 2019 2016 2017 2018 2019 Annual volume (barrels 'm) 1.9 1.8 1.8 1.7 1.5 1.4 1.4 1.4 % hedged 94% 90% 86% 35% 77% 68% 35% 11% Crude rate ($/barrel) $88.42 $70.12 $61.46 $60.88 $86.43 $72.14 $60.47 $49.94 Diesel rate ($/barrel) $106.18 $84.66 $75.86 $77.53 $114.48 $95.60 $82.43 $72.47 Equivalent cost per litre 44.5p 35.5p 31.8p 32.5p 72.0¢ 60.1¢ 51.8¢ 45.6¢ ▪ Prices include crude and refining cost but exclude delivery margins, duty, taxes and BSOG ▪ Equivalent cost per litre assumes a constant FX rate of $1.50 : £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 reflects the phased GWR electrification programme works First Bus First Rail First Student First Transit Greyhound Total Annual volume (barrels 'm) 1.0 0.9 0.7 0.1 0.7 3.4

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Foreign exchange

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31 Mar 2016 31 Mar 2015 Closing rate for the balance sheet US$ $1.41 $1.49 Closing rate for the balance sheet CAN$ $1.87 $1.88 ▪ Lower US Dollar compared to prior year balance sheet date: Year to 31 Mar 2016 Year to 31 Mar 2015 Effective rate US$ earnings $1.49 $1.58 Effective rate CAN$ earnings $1.93 $1.83 ▪ 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

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Pensions

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£m Deficit Cash contributions P&L charge1 Mar 2016 Mar 2015 Mar 2014 Mar 2016 Mar 2015 Mar 2014 Mar 2016 Mar 2015 Mar 2014 North America (212.5) (184.8) (152.4) 20.1 16.5 20.0 7.6 7.2 6.9 First Bus (57.5) (53.5) (94.2) 41.6 41.5 47.3 20.2 25.5 24.1 First Rail (0.9) (1.1) (14.1) 27.1 48.5 48.3 27.4 61.5 56.9 Total (270.9) (239.4) (260.7) 88.8 106.5 115.6 55.2 94.2 87.9 ▪ Group deficit increased by £31.5m principally due to poor asset returns partly offset by higher real discount rates ▪ The Group has re-estimated the calculation of the First Rail franchise pension adjustment under IAS19 (revised) to better reflect the commercial terms of the GWR and TPE franchises. This change in accounting estimate has been triggered by the new Direct Awards operated by GWR and First TransPennine Express in the year and has been applied prospectively from 1 April 2015. As a result of this change in accounting estimate the operating profit charge for First Rail pension schemes for the full year is £18.6m lower at £27.4m than it would otherwise have been. The change in the basis of estimate has no effect on the cash contributions made to the First Rail pension schemes in the year

1 Service costs excluding interest for defined benefit schemes

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Debt profile

▪ Headroom under committed facilities plus free cash: £940.2m (Mar 2015: £1,023.8m): − £800.0m (Mar 2015: £800m) of undrawn under committed bank revolver expiring June 2019 − Free cash of £140.2m (Mar 2015: £223.8m) excludes First Rail and other ring-fenced cash and deposits of £219.9m (Mar 2015: £196.7m) ▪ Average debt maturity 4.4 years (Mar 2015: 5.2 years)

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£0m £100m £200m £300m H1 16/17 H2 16/17 H1 17/18 H2 17/18 H1 18/19 H2 18/19 H1 19/20 H2 19/20 H1 20/21 H2 20/21 H1 21/22 H2 21/22 H1 22/23 H2 22/23 H1 23/24 H2 23/24 H1 24/25 H2 24/25 Lease finance Private placement notes Bonds Loan notes £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

14 June 2016 FirstGroup full year results for the twelve months to 31 March 2016

Net finance costs and taxation

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Net finance costs, £m Mar 2016 Mar 2015 Bonds 84.2 84.9 Bank borrowings 13.0 16.8 Loan notes 1.0 1.0 Senior unsecured loan notes 4.3 4.1 Finance lease interest 8.9 9.4 Notional interest on long term provisions 14.8 15.2 Notional interest on pensions 7.6 10.1 Investment income (1.4) (1.8) Net finance costs 132.4 139.7 Taxation, £m Mar 2016 Mar 2015 Current tax 21.1 17.7 Deferred tax (4.0) 2.6 Tax charge 17.1 20.3 Tax paid 7.0 4.5 Tax rate on adjusted profit before tax 23.0% 22.0%

14 June 2016 FirstGroup full year results for the twelve months to 31 March 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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