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

FirstGroup plc Half-yearly results For the six months to 30 September 2018 Tuesday 13 November 2018 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018

Chairman overview ▪ Clear divisional strategies in place across the Group to mobilise value ▪ Encouraging progress made in the first half of the financial year ▪ Matthew Gregory appointed as Chief Executive – right person to drive forward our plans at pace ▪ Board strengthened further with addition of Steve Gunning as non- executive director ▪ Clear divisional focus while maintaining strong challenge and creating more strategic flexibility at the Group level ▪ Strong focus on service throughout the Group, to provide greater ease and convenience for our customers 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 2

Summary ▪ First half growth in revenue, adjusted operating profit and adjusted EPS − Road divisions progressing, partially offset by lower Rail contribution, as expected − Cash performance in line − No change to Group FY outlook ▪ Key developments in the period: − Strong First Student bid season and September school start up went well − First Bus passenger revenue growth and margin momentum continued, underpinned by contactless roll out and other customer-focused actions − Greyhound review completed and improvement plan underway; withdrew from Western Canada in October 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 3

Financial summary Change in Road divisions SWR-adjusted £m H1 2018 H1 2017 Change CC 1 change, in CC 1 change in CC 2 Revenue 3,303.3 2,771.3 +19.2% +21.6% +2.0% +6.0% Adjusted 3 - EBITDA 255.1 278.2 (8.3)% (5.5)% - Operating profit 92.4 89.4 +3.4% +9.2% +17.9% +19.7% - Margin % 2.8% 3.2% (40)bps (30)bps +40bps +40bps - Net finance costs (50.4) (58.9) (14.4)% - Profit before tax 42.0 30.5 +37.7% +63.4% - Effective tax rate % 22.5% 30.0% (750)bps - Attributable profit 34.9 22.4 +55.8% +83.2% - EPS p 2.9p 1.9p +52.6% +81.3% Net cash inflow 21.9 +131.1% 50.6 Net debt 4 1,179.9 (11.2)% (11.6)% 1,047.7 Net debt: EBITDA x 1.7x 1.6x Ring-fenced cash adjusted 2.2x 2.2x net debt: EBITDA x 1 Change in constant currency ('CC') is based on retranslating H1 2017 foreign currency amounts at H1 2018 rates 2 Change excluding SWR franchise revenue (which became part of First Rail in August 2017), in constant currency 3 Before other intangible asset amortisation charges and certain other items 4 Net debt is stated excluding accrued bond interest 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 4

Revenue performance ▪ Group revenue growth +6.0% in constant currency excluding SWR franchise ▪ Road divisions growth +2.0% in constant currency, led by First Student and First Bus 425.1 3,303.3 ▪ Solid Rail LFL passenger growth in the period, supplemented by transition of GWR from premium to subsidy 121.7 0.4 2,878.2 2,771.3 40.4 5.7 2,715.8 (5.7) (0.1) (55.5) H1 2017 Currency currency First Student First Transit Greyhound First Bus First Rail (ex- Group items H1 2018 sub- SWR H1 2018 revenue H1 2017 constant revenue SWR) total 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 5

Adjusted 1 operating profit ▪ Road divisions' margin improved 40bps in constant currency, with progress from First Student, First Bus and First Transit more than offsetting challenges in Greyhound ▪ Rail profit slightly lower with margin rebased as previously indicated; solid profitability in GWR partially offset by challenging trading conditions for SWR ▪ TPE trading in line with our revised expectations 4.6 9.0 13.1 92.4 89.4 (1.8) (4.2) 84.6 (12.9) (4.8) operating Currency currency First Student First Transit Greyhound Group items operating H1 2017 constant H1 2017 H1 2018 First Bus First Rail profit profit 1 Before amortisation charges and certain other items 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 6

First Student ▪ Strong bid season; on track for net increase in fleet to c.42,500 and growth in our market share for the first time in a number of years − 92% retention on contracts due for renewal improved significantly on 83% in prior season − Price increases continue to offset cost inflation associated with driver shortages − New business wins of 1,580 buses mainly from share shift also ahead of target − Small acquisition (70 buses) in the period; pipeline of opportunities growing ▪ School start up has gone well; driver shortages remain a continuing challenge but our planning and processes ensured we maintained record customer satisfaction ▪ FY margin benefit from pricing, cost efficiencies (especially in maintenance) and other management actions, as well as operating days and weather make up days $m Change in 6 months to 30 Sep constant fx 2 2018 2017 Revenue 1,038.5 982.8 +5.5% Adjusted 1 operating profit 36.6 18.1 +113.9% Adjusted 1 operating margin 3.5% 1.8% +160bps 1 Before amortisation charges and certain other items 2 Based on retranslating H1 2017 foreign currency amounts at H1 2018 rates 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 7

First Student ▪ Leveraging our market leadership to grow through higher contract retention, technology innovation for our customers and selective bolt-on acquisitions 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 8

First Transit ▪ Bid discipline maintained – focused on customer needs and shareholder returns − Main wins in fixed route, paratransit in the first half − Customers are recognising continued driver cost challenges in contract pricing – and in negotiated variations in some cases − 18 new contracts and 96% retention on business due for renewal in the period ▪ Reduction in Canadian oil sands business resulted in rebased margin, as expected − Non-recurrence of hurricane impact from prior year ▪ Experienced management team continue to raise productivity and cost efficiency; continuing to find growth from new opportunities and adapting our business model $m Change in 6 months to 30 Sep constant fx 2 2018 2017 Revenue 691.3 692.0 - Adjusted 1 operating profit 32.5 26.7 +23.2% Adjusted 1 operating margin 4.7% 3.9% +90bps 1 Before amortisation charges and certain other items 2 Based on retranslating H1 2017 foreign currency amounts at H1 2018 rates 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 9

First Transit ▪ Maintaining leadership in our core lines of business while piloting new business models and serving our customers in adjacent business areas Milo shared autonomous vehicle, Arlington, TX Paratransit operations in Vancouver, BC University of Rochester, N.Y., shuttle service A-train commuter rail, Denton County, TX 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 10

Greyhound ▪ First half LFL revenue (0.7)% ▪ Short haul continues to outperform long haul where airline competition is greatest ▪ Profitability impacted by maintenance and other costs, including fuel ▪ Targeted reinvestment and refurbishment of fleet underway ▪ Withdrawal from Western Canada in October $m Change in 6 months to 30 Sep constant fx 2 2018 2017 Revenue 455.4 463.0 (1.6)% Adjusted 1 operating profit 12.9 30.5 (55.8)% Adjusted 1 operating margin 2.8% 6.6% (360)bps 1 Before amortisation charges and certain other items 2 Based on retranslating H1 2017 foreign currency amounts at H1 2018 rates 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 11

Greyhound review ▪ Capture maximum value from our nationwide network and iconic brand in a challenging operating environment ▪ Low cost airlines are a challenge; competitive situation varies significantly across the network ▪ Short and long haul businesses share fleet and infrastructure − 'Override' effects of national network has meaningful value ▪ Clear path to turning around performance, which is being executed at pace: ▪ Pricing levers ▪ Sales channels, marketing and At least loyalty mid-single digit ▪ Bolt and Express efficiencies margin in medium term ▪ Management / organisation ▪ Maintenance / other costs 13 November 2018 FirstGroup half-yearly results for the six months to 30 September 2018 12