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

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

FirstGroup plc Full year results

For the twelve months to 31 March 2017

Thursday 1 June 2017

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Tim O'Toole Chief Executive

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Overview

▪ Significant improvement in operating results and substantial cash generation delivered as planned ▪ Maintained our consistent and disciplined approach to bidding for future business throughout the Group ▪ Continuing to invest in technology to drive growth by simplifying our services for customers, while deepening our understanding of their needs ▪ Results demonstrate progress made in repositioning FirstGroup to create sustainable value, commensurate with our market positions and scale ▪ Stable platform allows us to take advantage of our opportunities, despite the mixed trading environment in our markets

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Matthew Gregory Chief Financial Officer Financial review

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Financial overview

▪ Revenue £5,653.3m (2016: £5,218.1m), +8.3% driven mainly by currency ▪ Adjusted operating profit £339.0m (2016: £300.7m) reflects several factors: − 250bps improvement in First Student margin − Rebased First Rail margin under new contracts − Significant currency effects, with favourable translation of North American profits

• ffset by higher costs for fuel in UK

▪ Adjusted EPS +20.4% ▪ Net cash inflow improved by £111.2m to £147.2m ▪ Net debt to EBITDA reduced to 1.9x (2016: 2.3x) ▪ At constant exchange rates, Group ROCE increased by 60bps to 7.3%

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Financial summary

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£m Mar 2017 Mar 2016 Change Change in constant currency1 Revenue 5,653.3 5,218.1 +8.3% (0.5)% Adjusted2

• Operating profit

339.0 300.7 +12.7% +2.3%

• Margin %

6.0% 5.8% +20bps +20bps

• Net finance costs

(132.0) (132.4) (0.3)%

• Profit before tax

207.0 168.3 +23.0%

• Effective tax rate %

26.0% 23.0% +300bps

• Attributable profit

149.4 123.5 +21.0%

• EPS p

12.4p 10.3p +20.4% Net debt3 1,289.9 1,410.2 (8.5)% (11.2)%

1 Change in constant currency throughout this document is based on retranslating FY 2016 foreign currency amounts at FY 2017 rates 2 Before amortisation charges and certain other items 3 Net debt is stated excluding accrued bond interest

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

5,218.1 463.3 5,681.4 (7.2) 44.1 (13.8) (12.0) (39.6) 0.4 5,653.3

Mar 2016 revenue Currency Mar 2016 constant currency First Student First Transit Greyhound First Bus First Rail Group items Mar 2017 revenue

Revenue performance

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Mar 2017 revenue £m Change (constant fx) First Student 1,780.3 (0.4)% First Transit 1,042.0 +4.4% Greyhound 684.7 (2.0)% First Bus 861.7 (1.4)% First Rail 1,268.8 (3.0)% Group items 15.8 Total 5,653.3 (0.5)% Reported total +8.3%

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

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Operating performance

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1 Before amortisation charges and certain other items

Mar 2017

• perating profit1

£m FY 2017 margin1 Margin change (constant fx) First Student 171.1 9.6% +250bps First Transit 73.3 7.0% +10bps Greyhound 42.6 6.2% +30bps First Bus 37.0 4.3% (170)bps First Rail 53.8 4.2% (140)bps Group items (38.8) Total 339.0 6.0% +20bps Reported total +20bps Figures include fx impact

• n UK fuel costs of:
• First Bus

£(11.5)m

• First Rail

£(8.3)m

▪ Group margin +20bps in constant currency ▪ Significant improvement in First Student margin; Rail margin rebased under new contracts ▪ Challenging market conditions and higher UK fuel costs affecting both UK businesses

300.7 30.7 331.4 43.5 4.3 1.1 (15.8) (19.1) (6.4) 339.0

Mar 2016

• perating

profit Currency Mar 2016 constant currency First Student First Transit Greyhound First Bus First Rail Group items Mar 2017

• perating

profit

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Income statement – continued

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1 Before amortisation charges and certain other items

£m Mar 2017 Mar 2016 Change Adjusted1 Operating profit 339.0 300.7 +12.7% Net finance costs (132.0) (132.4) Profit before tax 207.0 168.3 +23.0% Tax (53.8) (38.7)

• Effective tax rate %

26.0% 23.0% +300bps Non-controlling interests (3.8) (6.1) Attributable profit 149.4 123.5 +21.0% EPS p 12.4p 10.3p +20.4%

P&L tax rate to increase further Rail minority Broadly flat, principally bonds

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Cash capex (404.3)

Net cash flow (£m)

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1 Operating cash flow divided by Group adjusted operating profit

686.6 (323.9) (80.4) 43.0 (30.6) 6.4 301.1 (37.6) (116.3) 147.2 EBITDA Road divisions 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 inflow

Operating cash flow / cash conversion1: Mar 2017: £301.1m / 89% Mar 2016: £192.0m / 64%

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Financial position

▪ Strong liquidity and stable financing position with net debt of £1,289.9m − Headroom under committed facilities plus free cash: £941.1m (Mar 2016: £940.2m) − Net debt: EBITDA ratio 1.9x (Mar 2016: 2.3x) − Long term facilities in place – average maturity 3.6 years (Mar 2016: 4.4 years) − Ratings from Standard & Poor's and Fitch currently BBB- and stable outlook − Bank debt amended and extended in March; next bank refinancing July 2021 − $50m private placement notes repaid Oct 2016 − Next bond maturity Sep 2018 ▪ Expect cash interest to remain broadly unchanged until bonds start to mature ▪ Pension deficit £358.5m (Mar 2016: £270.9m) due to lower real discount rates

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Guidance

▪ Mixed trading environment with opportunities for steady progress in the North American divisions but continued economic uncertainty in the UK ▪ Further progress expected from the Road divisions, with First Rail margin reducing; continued free cash generation expected after disciplined investment to support our customers’ and communities’ needs ▪ Road divisions cash capex broadly flat in 2018; expect increased Rail capex in 2018 and 2019 (mainly funded through franchise agreements) ▪ Interest costs broadly flat until bonds come due ▪ P&L tax rate to continue increase over time (US earnings) ▪ Inclusion of South Western rail franchise from August 2017 − 70/30 partnership with MTR – minority accounted − Estimated £90m working capital inflow ▪ Year to March 2018 will be a 53 week year for Road divisions

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Tim O'Toole Chief Executive Business review

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Student

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▪ Significant margin improvement despite ongoing driver shortages ▪ Benefiting from our market leadership position and unique scale − Cost efficiency: best practice sharing and standardised processes, First Transit management of maintenance − Pricing strategy: smaller but higher returning contract portfolio − Technology: Focus GPS, safety, real-time bus location information for customers ▪ Looking ahead − Bid strategy continues; contract retention increasing, moderating pricing given portfolio turnover delivered over last three years − Potential for bolt-on M&A, organic growth

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Transit

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▪ Team returned the business to growth and maintained margin in the year ▪ Making the most of our transit management expertise and track record − Continuous bid discipline and rigorous execution − Sustained, attractive margins given modest capital employed − Flexible approach to market opportunities – oil sands, Panama, India ▪ Looking ahead − Continue to enhance efficiency and offer compelling value to customer − Market growth: commuter rail (leveraging UK rail expertise), private fleet maintenance, international − Ridesharing and technology partnerships

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Greyhound

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▪ Passenger volumes down for year but evidence of stability in second half ▪ Increasing ability to take advantage of unique nationwide network and iconic brand − Flexible cost base, responsive to passenger demand patterns − Real-time pricing, yield management, online and mobile – Greyhound setting our pace in customer communications − Point-to-point product continues to outperform the market ▪ Looking ahead − Further enhancing customer experience online, in terminal, on board, and post-trip to build loyalty and reach new demographics − Mexico expansion

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Bus

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▪ Industry conditions impeding overall volume growth (congestion, high street retail trends, funding cuts, modal shift) ▪ Portfolio of local businesses each requiring a varying mix of actions to restore overall profitable growth − Fares, networks and tickets, fleet investment, local partnerships − Cost reductions and service improvements − Collaborating with rest of Group on multimodal journey information, tickets, apps and online, productivity and reliability ▪ Looking ahead − Continue rebuilding customer patronage: simplicity, reliability, efficiency − Plans tailored to local conditions in each of our businesses; investment/consolidation

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Rail

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▪ Short term challenges but well positioned for the long term ▪ Continue to deploy our breadth of rail expertise and experience for our passengers, notwithstanding market slowdown − GWR direct award providing continuity through infrastructure upheaval − TPE growth driven by introduction of new trains from 2018/19 − South Western award based on quality not price ▪ Looking ahead − Delivering our franchise commitments − South Western mobilisation − Continued disciplined approach to bidding

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Summary

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▪ Significant improvement in operating results and substantial cash generation delivered as planned ▪ Maintained our consistent and disciplined approach to bidding for future business throughout the Group ▪ Continuing to invest in technology to drive growth by simplifying our services for customers, while deepening our understanding of their needs ▪ Results demonstrate progress made in repositioning FirstGroup to create sustainable value, commensurate with our market positions and scale ▪ Stable platform allows us to take advantage of our opportunities, despite the mixed trading environment in our markets

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

FirstGroup plc Full year results

For the twelve months to 31 March 2017

Thursday 1 June 2017

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Appendices

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1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Financial results

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£m Mar 2017 Mar 2016 Change Revenue 5,653.3 5,218.1 +8.3% EBITDA1 686.6 615.9 +11.5% EBITDA margin % 12.1% 11.8% +30bps Operating profit2 339.0 300.7 +12.7% Operating profit margin % 6.0% 5.8% +20bps Net finance costs (132.0) (132.4) (0.3)% Profit before tax2 207.0 168.3 +23.0% Non-GAAP adjustments (54.4) (54.8) (0.7)% Profit before tax 152.6 113.5 +34.4% Tax (36.5) (17.1) +113.5% Profit after tax 116.1 96.4 +20.4% Basic EPS p 9.3p 7.5p +24.0% Adjusted EPS p 12.4p 10.3p +20.4%

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

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Divisional performance

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Revenue Operating profit1 Operating margin1 Mar 2017 Mar 2016 Mar 2017 Mar 2016 Mar 2017 Mar 2016 £m First Student 1,780.3 1,553.5 171.1 112.6 9.6% 7.2% First Transit 1,042.0 864.8 73.3 60.1 7.0% 6.9% Greyhound 684.7 605.1 42.6 35.5 6.2% 5.9% First Bus 861.7 870.9 37.0 52.0 4.3% 6.0% First Rail 1,268.8 1,308.4 53.8 72.9 4.2% 5.6% Group items 15.8 15.4 (38.8) (32.4) Total 5,653.3 5,218.1 339.0 300.7 6.0% 5.8% $m2 First Student 2,323.3 2,332.7 222.0 165.0 9.6% 7.1% First Transit 1,358.9 1,303.4 95.2 90.6 7.0% 7.0% Greyhound 894.0 914.0 55.2 54.4 6.2% 6.0% North America 4,576.2 4,550.1 372.4 310.0 8.1% 6.8%

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

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Student

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$m Mar 2017 Mar 2016 Change Revenue 2,323.3 2,332.7 (0.4)% Operating profit1 222.0 165.0 +34.5% Margin % 9.6% 7.1% +250bps $m Revenue Operating profit1 Mar 2016 2,332.7 165.0 Operating days 37.9 15.4 Weather (25.3) (13.9) Fuel rate (3.4) 12.2 Pricing above inflation 33.3 33.3 Net growth (93.3) (7.4) Pay above inflation

• (15.8)

Management cost initiatives

• 26.1

Inflation / FX / other 41.4 7.1 Mar 2017 2,323.3 222.0

1 Before amortisation charges and certain other items

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Transit

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$m Mar 2017 Mar 2016 Change Revenue 1,358.9 1,303.4 +4.3% Operating profit1 95.2 90.6 +5.1% Margin % 7.0% 7.0% flat $m Revenue Operating profit1 Mar 2016 1,303.4 90.6 Growth / new business 34.1 6.1 Driver costs

• (6.1)

Inflation / FX / other 21.4 4.6 Mar 2017 1,358.9 95.2

1 Before amortisation charges and certain other items

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Greyhound

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$m Mar 2017 Mar 2016 Change Revenue 894.0 914.0 (2.2)% Operating profit1 55.2 54.4 +1.5% Margin % 6.2% 6.0% +20bps $m Revenue Operating profit1 Mar 2016 914.0 54.4 Revenue (19.4) (19.4) Fuel cost savings – rate

• 8.6

Management actions

• 32.3

Cost inflation

• (17.0)

FX / other (0.6) (3.7) Mar 2017 894.0 55.2

1 Before amortisation charges and certain other items

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Bus

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1 Before amortisation charges and certain other items

£m Mar 2017 Mar 2016 Change Revenue 861.7 870.9 (1.1)% Operating profit1 37.0 52.0 (28.8)% Margin % 4.3% 6.0% (170)bps £m Revenue Operating profit1 Mar 2016 870.9 52.0 Revenue (4.4) (4.4) Inflation / pension

• (17.9)

Fuel cost savings – rate

• 14.0

Fuel – FX

• (11.5)

Depot closures and actions (9.7) 14.2 Other 4.9 (9.4) Mar 2017 861.7 37.0

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Rail

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£m Mar 2017 Mar 2016 Change Revenue 1,268.8 1,308.4 (3.0)% Operating profit1 53.8 72.9 (26.2)% Margin % 4.2% 5.6% (140)bps

1 Before amortisation charges and certain other items

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Rail passenger revenue growth

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Mar 2017 Mar 2016 Great Western Railway (GWR) 0.3% 6.1% TransPennine Express (TPE) 5.9% 6.0% Hull Trains 5.8% 15.8% Total 1.3% 6.3% ▪ Like-for-like volume increased by 0.7%

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Non-GAAP adjustments

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£m Mar 2017 Mar 2016 Amortisation charges (60.2) (51.9) Gain on disposal of property 21.6

• Restructuring and reorganisation costs

(16.8)

• Ineffectiveness on financial derivatives

1.0 (0.4) Pensions past service gain

• 10.8

Insurance reserve

• (10.5)

First Bus depot sales and closures

• (1.8)

Legal claims

• (1.0)

Other non-GAAP adjusting items 5.8 (2.9) Total non-GAAP adjustments (54.4) (54.8) ▪ During the year the sale of a Greyhound terminal in San Jose, California was completed for which resulted in a gain on sale of £21.6m ▪ There was a charge of £16.8m in the year for restructuring and reorganisation costs across the Group relating to the business turnarounds

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Current diesel hedge position

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Year to 31 March UK North America 2017/18 2018/19 2019/20 2017/18 2018/19 2019/20

Annual volume (barrels 'm)

1.9 1.7 1.3 1.3 1.3 1.3

% hedged

89% 55% 15% 57% 28% 18%

Crude rate ($/barrel)

$60.14 $55.31 $47.97 $57.25 $49.76 $49.59

Diesel rate ($/barrel)

$74.63 $72.71 $67.58 $76.71 $70.05 $70.50

Equivalent cost per litre

36.1p 35.2p 32.7p 48.2¢ 44.1¢ 44.3¢ ▪ 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.2.0m barrels provided by customers or protected by contract escalators ▪ The decrease in expected annual volume consumption in 2019/20 reflects the end of the minimum GWR franchise term First Bus First Rail First Student First Transit Greyhound Total

Annual volume (barrels 'm)

1.0 0.9 0.6 0.1 0.6 3.2

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Foreign exchange

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31 Mar 2017 31 Mar 2016 Closing rate for the balance sheet US$ $1.25 $1.41 Closing rate for the balance sheet CAN$ $1.67 $1.87 ▪ Lower US Dollar compared to prior year balance sheet date: Year to 31 Mar 2017 Year to 31 Mar 2016 Effective rate US$ earnings $1.29 $1.49 Effective rate CAN$ earnings $1.74 $1.93 ▪ 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

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Foreign exchange

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£m Mar 2016 Translation impact Mar 2016 constant currency UK fuel impact Non- currency Mar 2017 Revenue 5,218.1 +463.3 5,681.4

• (28.1)

5,653.3

• North American divisions

3,023.4 +460.5 3,483.9

• +23.1

3,507.0

• UK divisions

2,179.3 +2.8 2,182.1

• (51.6)

2,130.5

• Group items

15.4

• 15.4
• +0.4

15.8 Operating profit1 300.7 +30.7 331.4 (19.8) +27.4 339.0

• North American divisions

208.2 +29.9 238.1

• +48.9

287.0

• UK divisions

124.9 +0.8 125.7 (19.8) (15.1) 90.8

• Group items

(32.4)

• (32.4)
• (6.4)

(38.8) Margin1 5.8% 5.8% 6.0%

• North American divisions

6.9% 6.8% 8.2%

• UK divisions

5.7% 5.8% 4.3%

1 Before amortisation charges and certain other items

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Net finance costs and taxation

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Net finance costs, £m Mar 2017 Mar 2016 Bonds 83.7 84.2 Bank borrowings 11.4 13.0 Loan notes 1.0 1.0 Senior unsecured loan notes 4.3 4.3 Finance lease interest 6.4 8.9 Notional interest on long term provisions 17.5 14.8 Notional interest on pensions 8.9 7.6 Investment income (1.2) (1.4) Net finance costs 132.0 132.4 Taxation, £m Mar 2017 Mar 2016 Current tax (4.3) 21.1 Deferred tax 40.8 (4.0) Tax charge 36.5 17.1 Tax paid 10.2 7.0 Tax rate on adjusted profit before tax 26.0% 23.0%

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

EBITDA by division

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Revenue EBITDA1 EBITDA margin1 Mar 2017 Mar 2016 Mar 2017 Mar 2016 Mar 2017 Mar 2016 £m First Student 1,780.3 1,553.5 348.7 266.4 19.6% 17.1% First Transit 1,042.0 864.8 91.9 74.7 8.8% 8.6% Greyhound 684.7 605.1 79.4 69.7 11.6% 11.5% First Bus 861.7 870.9 104.5 113.4 12.1% 13.0% First Rail 1,268.8 1,308.4 98.8 122.4 7.8% 9.4% Group items 15.8 15.4 (36.7) (30.7) Total 5,653.3 5,218.1 686.6 615.9 12.1% 11.8% $m2 First Student 2,323.3 2,332.7 454.0 396.8 19.5% 17.0% First Transit 1,358.9 1,303.4 119.5 112.6 8.8% 8.6% Greyhound 894.0 914.0 103.3 105.9 11.6% 11.6% North America 4,576.2 4,550.1 676.8 615.3 14.8% 13.5%

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

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Total capital expenditure

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£m Cash Fixed asset/Software additions Mar 2017 Mar 2016 Mar 2017 Mar 2016 First Student 198.7 245.7 165.9 209.2 First Transit 17.8 20.5 17.8 19.1 Greyhound 30.1 21.1 31.7 24.8 First Bus 74.4 57.6 63.9 91.3 First Rail 80.4 58.1 75.4 65.4 Group items 2.9 2.2 2.9 2.2 Total 404.3 405.2 357.6 412.0 ▪ In addition during the year we entered into operating leases for new vehicles in First Transit with capital value £8.0m (2016: £1.3m)

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Capital expenditure

▪ Disciplined reinvestment in passenger carrying fleet and IT upgrade programmes continue ▪ Cash capital investment at £290m for Road divisions in FY2016/17 − Capital allocation decisions focused increasingly on maintenance of existing asset portfolio and selected growth opportunities with good returns on incremental capital − Expect increased First Rail capex in 2018 and 2019, largely funded through franchise agreements

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£m Mar 2017 Mar 2016 Passenger carrying vehicles (PCV) 224.7 282.7 IT including transformation & software 33.3 28.9 Facilities and depot development 12.6 18.2 Equipment 19.6 18.1 Road divisions capital investment 290.2 347.9 First Rail 75.4 65.4 Total capital investment 365.6 413.3 Net creditor movement 46.7 (6.8) Funded by operating lease (8.0) (1.3) Gross cash capex 404.3 405.2

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

First Rail ring-fenced cash and bonds

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First Rail bonds, £m Mar 2017 Mar 2016 GWR performance bond 10.0 10.0 GWR season ticket bond 28.4 28.8 FTPE performance bond

• 4.4

TPE performance bond 15.0

• TPE season ticket bond

2.5

• TPE parent company support bond

84.4

• Total

140.3 43.2 ▪ Season ticket bond monies are included within First Rail ring-fenced cash ▪ Performance bonds are non-cash items First Rail ring-fenced cash, £m Mar 2017 Mar 2016 GWR 211.9 177.2 FTPE 43.9 40.3 Total 255.8 217.5

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

£0m £100m £200m £300m 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

Debt profile

▪ Headroom under committed facilities plus free cash: £941.1m (Mar 2016: £940.2m): − £800m (Mar 2016: £800m) of undrawn under committed bank revolver expiring July 2021 − Free cash of £141.1m (Mar 2016: £140.2m) excludes First Rail and other ring-fenced cash and deposits of £259.8m (Mar 2016: £219.9m) ▪ Average debt maturity 3.6 years (Mar 2016: 4.4 years)

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

£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 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

Pensions

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£m Deficit Cash contributions P&L charge1 Mar 2017 Mar 2016 Mar 2015 Mar 2017 Mar 2016 Mar 2015 Mar 2017 Mar 2016 Mar 2015 North America (216.7) (212.5) (184.8) 14.0 20.1 16.5 9.9 7.6 7.2 First Bus (139.8) (57.5) (53.5) 50.0 41.6 41.5 16.7 20.2 25.5 First Rail (2.0) (0.9) (1.1) 21.9 27.1 48.5 21.7 27.4 61.5 Total (358.5) (270.9) (239.4) 85.9 88.8 106.5 48.3 55.2 94.2

1 Service costs excluding interest for defined benefit schemes

▪ Group deficit increased by £88m principally due to lower net discount rates in the UK and North America

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

ROCE

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Group ROCE Road divisions ROCE As at 31 March 2016 7.2% 5.1% Foreign exchange (0.5)% (0.1)% ROCE at constant currency 6.7% 5.0% Rail portfolio (0.2)% ̶ Road divisions trading 0.8% 0.8% Tax rate / other ̶ (0.1)% As at 31 March 2017 7.3% 5.7%

1 June 2017 FirstGroup full year results for the twelve months to 31 March 2017

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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