REG-FirstGroup PLC: Final Results
14/06/2022 07:15
FIRSTGROUP PLC
RESULTS FOR THE 52 WEEKS TO 26 MARCH 2022
FY 2022 (£m) FY 2021 (£m) Change (£m)
Cont. Disc. Total Cont. Disc. Total Cont. Disc. Total
Revenue 4,591.1 996.9 5,588.0 4,318.8 2,526.0 6,844.8 +272.3 (1,529.1) (1,256.8)
Adjusted (1)operating profit 106.7 120.1 226.8 112.2 108.0 220.2 (5.5) +12.1 +6.6
Adjusted (1)operating profit margin 2.3% 12.0% 4.1% 2.6% 4.3% 3.2% (30)bps +770bps +90bps
Adjusted (1)profit/(loss) before tax 24.8 108.6 133.4 (29.7) 79.9 50.2 +54.5 +28.7 +83.2
Group adjusted attributable profit (2) 36.2 - 36.2 19.9 - 19.9 +16.3 - +16.3
Adjusted (1)EPS (3) 1.6p 8.6p 10.2p (2.8)p 6.1p 3.3p +4.4p +2.5p +6.9p
Adjusted cash flow (4) 1,008.9 258.9 +750.0
Adjusted Net Debt (5) 3.9 1,438.7 (1,434.8)
FY 2022 (£m) FY 2021 (£m)
Statutory Cont. Disc. Total Cont. Disc. Total
Revenue 4,591.1 996.9 5,588.0 4,318.8 2,526.0 6,844.8
Operating profit 122.8 683.3 806.1 171.0 114.8 285.8
Profit before tax 654.1 115.8
EPS 60.2p 6.5p
Net debt 619.0 2,625.8
- Bonds, bank and other debt net of (cash) (464.2) 775.8
- IFRS 16 lease liabilities 1,083.2 1,850.0
'Cont.' refers to the Continuing operations comprising First Bus, First Rail
and Group items. 'Disc.' refers to discontinued operations, being First
Student, First Transit and Greyhound US. Statutory operating profit from
discontinued operations of £683.3m includes the gains on sale of First
Student, First Transit and Greyhound US.
Overview
* FY 2022 adjusted operating profit from continuing operations and adjusted
net debt(5) ahead of expectations; Group adjusted attributable profit(2)
increased to £36.2m (FY 2021: £19.9m)
* A transformed business – delivered on our commitments to simplify and
refocus the business while releasing value to shareholders: * Three North
American businesses sold for full strategic value
* Balance sheet deleveraged and de-risked, with UK pension deficit payments no
longer required
* £500m returned to shareholders through tender offer
* Evolution of Board complete and new CEO Graham Sutherland in place
* Encouraging progress in realising further sources of value: * Greyhound
legacy assets and liabilities management ahead of plan: expect to exceed $155m
value realisation target from FY 2023 onwards following insurance risk
transfer agreements and in advanced stage of a potential portfolio sale of the
remaining properties
* First Transit maximum earnout potential increased to $290m ($140m carrying
value)
* Up to £117m potential escrow release and other cash returns from UK
pensions over medium term
* Resilient earnings base established, with First Bus more agile and longer
term visibility for First Rail: * First Bus now delivering data-driven network
realignment, pricing and cost efficiency actions more flexibly in response to
evolving passenger demand and the broader inflationary environment
* Multi-year National Rail Contract for GWR close to being awarded; DfT
expected to conclude Avanti's in autumn 2022 – longer term contractual
income streams being secured in First Rail alongside established additional
services income streams
* Inflection point for government support of public transport in the UK, with
significant funding for ambitious strategies to increase patronage and enhance
modal shift from cars in the coming years
* Additional earnings opportunities added in both divisions, including new B2B
contracts and buyout of SPS joint venture partner in First Bus, and successful
Lumo open access launch in First Rail
* Solid foundations in place for sustainable, long term value creation: strong
financial position and outlook underpins a balanced capital allocation policy
including the start of annual dividends: * While some uncertainty remains
around the pace of recovery in light of the pandemic and broader economic
backdrop, current trading is in line with our expectations, with the Group
expected to make significant further progress in FY 2023
* First Bus investment to meet zero emission fleet commitments well covered by
divisional cash generation and government co-funding to facilitate the
decarbonisation agenda
* Actively developing further organic and inorganic opportunities for value
creation in the UK and elsewhere
* Progressive annual dividends to begin with final dividend of 1.1p per share
proposed
* Potential for further additional distributions to shareholders over time
Financial summary
* Total Group adjusted operating profit increased by £6.6m as pandemic
effects on travel begin to recede and passenger volumes build: * Adjusted
operating profit from continuing operations ahead of expectations at £106.7m
(FY 2021: £112.2m), with a stronger First Rail performance than expected at
start of year and central cost reductions ahead of plan following the North
American sales, with First Bus in line
* Discontinued operations adjusted operating profit was £120.1m (FY 2021:
£108.0m), with part-year contributions from the North American operations,
now sold, offset by no depreciation being charged to the income statement
under the accounting rules once they became classed as held for sale
* £122.8m statutory operating profit from continuing operations (FY 2021:
£171.0m) includes £16.1m credit from net adjusting items (FY 2021: £58.8m)
* £563.2m credit from net adjusting items in discontinued operations (FY
2021: £6.8m) principally reflects gains on sale of the North American
businesses and the resulting uses of proceeds
* Group adjusted attributable profit(2) (which adjusts First Rail earnings to
align to the cash fees attributable to the Group from the management fee-based
operations) increased to £36.2m (FY 2021: £19.9m)
* Underlying operational cash flow was ahead of expectations due to better
business performance and timing of certain working capital flows
* £3.9m adjusted net debt(5) (FY 2021: £1,438.7m), with more than £530m of
undrawn committed liquidity
* Final dividend of 1.1p per share proposed resulting in a total dividend of
£c.8.1m, in line with announced policy of 3x cover based on Group adjusted
attributable profit(2); payable on 19 August 2022 subject to approval of
shareholders at the 2022 AGM
Current trading and FY 2023 outlook for the ongoing Group
* While some uncertainty remains around the pace of recovery in light of the
pandemic and the broader macroeconomic backdrop, current trading is in line
with our expectations, with the Group expected to make significant further
progress in FY 2023
* First Bus passenger volume has reached 76% of the equivalent 2019 period
recently. Although clearly sensitive to the broader consumer spending outlook,
we expect First Bus volumes to continue to increase in the current financial
year with performance weighted to H2 2023, reflecting our increasing ability
to adapt operations to passenger demand and the inflationary environment once
recovery funding tapers off in the autumn
* First Rail's four management fee-based operations (which have no passenger
revenue risk and limited cost risk) continue to deliver performance metrics in
line with management expectations, and with our open access operations
currently trading ahead of plan as a result of strong leisure demand, First
Rail's performance in FY 2023 is expected to reflect a positive contribution
from these businesses
* On track to realise a further c.£5m in previously announced central cost
savings (exceeding £10m p.a. target over FY 2021)
* Positive free cash generation after c.£90m cash capital expenditure on
First Bus zero-emission fleet expected, resulting in a small adjusted net
cash(5) position at end of current financial year (before any further sources
of value which may be received)
Commenting, Executive Chairman David Martin said:
"We have delivered on our commitments this year to refocus the business,
de-risk the balance sheet and unlock value for shareholders. As a cash
generative business with a strong balance sheet, FirstGroup is well placed to
invest in the services our passengers want, to sustain our path to a
zero-emission bus fleet, and to actively consider additional value creation
opportunities to leverage our market leading public transport expertise. The
Board's confidence in the prospects for the Group is reflected in the decision
to commence dividend payments."
Commenting, Chief Executive Officer Graham Sutherland said:
"The transformed Group has momentum and we expect to make significant further
progress in the year to March 2023. With leading positions in bus and rail, a
strong balance sheet and a clear purpose, FirstGroup has many opportunities
ahead to deliver sustainable shareholder value creation while delivering the
vital services that are key to achieving society’s sustainability and
economic goals.”
Contacts at FirstGroup: Investor relations: Faisal Tabbah Media: Stuart Butchers corporate.comms@firstgroup.co.uk Tel: +44 (0) 20 7725 3354 Contacts at Brunswick PR: Andrew Porter / Simone Selzer Tel: +44 (0) 20 7404 5959
A webcast for investors and analysts will be held at 9:00am today –
attendance is by invitation. Please email corporate.comms@firstgroup.co.uk in
advance of the webcast to receive joining details. To access the presentation
to be discussed on the webcast, together with a pdf copy of this announcement,
go to www.firstgroupplc.com/investors. A playback facility will also be
available there in due course.
Notes
(1 ) ‘Adjusted’ figures throughout this document are before
the gains on sale of the North American divisions, partial reversal of
impairment charges on Greyhound and certain other items as set out in note 4
to the financial statements.
(2) For definitions of alternative performance measures and other key
terms, see the definitions section from page 24.
(3) Adjusted EPS based on weighted average number of shares in the
year of 1,057.5m reflecting the tender offer completed in December 2021; pro
forma adjusted EPS for the continuing group at the current number of shares in
issue is 2.2p.
(4) ‘Adjusted cash flow’ is described in the table on page 21.
(5) 'Adjusted Net Debt/Cash' excludes ring-fenced cash and IFRS 16
lease liabilities from net debt as shown in the table on page 22.
Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR
6 Annex 1R: 1.1.
FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public
transport services. With £4.6 billion in revenue and more than 30,000
employees, our UK divisions transported nearly 1.5m passengers a day in the
last financial year. First Bus is the second largest regional bus operator in
the UK, serving two-thirds of the UK’s 15 largest conurbations with a fleet
of c.4,900 buses. First Rail is the UK’s largest rail operator, with many
years of experience running long-distance, commuter, regional and sleeper rail
services. We operate a fleet of c.3,800 rail vehicles through four management
fee-based train operating companies (Avanti, GWR, SWR, TPE) and two open
access routes (Hull Trains and Lumo). We create solutions that reduce
complexity, making travel smoother and life easier. Our businesses are at the
heart of our communities and the essential services we provide are critical to
delivering wider economic, social and environmental goals. We are formally
committed to operating a zero-emission First Bus fleet by 2035 and to cease
purchasing further diesel buses after 2022; and First Rail will help support
the UK Government’s goal to remove all diesel-only trains from service by
2040. In 2022 FirstGroup was named as one of the world's cleanest 200 public
companies for the third consecutive year by sustainable business media group
Corporate Knights in partnership with US not-for-profit organisation, As You
Sow. Visit our website at www.firstgroupplc.com and follow us @firstgroupplc
on Twitter.
Review of the year
In the last financial year we have transformed FirstGroup by delivering on our
commitments. Through consistent execution, we have simplified and refocused
the Group, unlocked substantial value for shareholders, strengthened the
balance sheet and accelerated our sustainability progress, all while
continuing to play our part in connecting people and communities throughout
the pandemic. FirstGroup is now a resilient and robust platform from which to
develop and maximise the opportunities that exist for growth. The transformed
FirstGroup has a clear and increasingly well-recognised role to play at the
heart of our communities and economies, is cash-generative, well-capitalised,
and able to invest in a low carbon future while supporting progressive
dividends to shareholders. There are challenges ahead to be sure, with
passenger demand growing but not yet restored to pre-pandemic levels and an
increasingly inflationary environment to contend with, but we believe
FirstGroup is very well placed to create substantial, and sustainable,
shareholder value in future.
Since September 2021 I have carried out the role of interim Executive Chairman
while the Board Nomination Committee conducted a thorough search process to
appoint a Chief Executive Officer. Shortly after the end of the financial year
we were pleased to appoint Graham Sutherland to the role. Graham has held a
number of senior leadership positions in organisations that provide critical
services to consumer, business and public sector customers across the UK, and
I am confident that he is ideally suited to take the Group forward. I resume
the role of Non-Executive Chairman from 1 July 2022 after a short handover
period.
Protecting our passengers and employees
Our first priority since the start of the coronavirus outbreak has been the
health and safety of our passengers, employees and communities. As the
pandemic has evolved, we have followed all relevant public health authority
guidance for our businesses and worked closely with our suppliers to ensure we
have the appropriate equipment in place. We continue to follow and also
develop best practice in all matters relating to the safety of our passengers
and people.
Corporate activity, balance sheet and future sources of value
As noted at the half year, in the short term our financial results are
complex, reflecting the sale of the three North American divisions for a
combined enterprise value of $4.6bn, c.£2.3bn of debt repayments and
de-risking of pensions and other liabilities, the £500m cash return to
shareholders and other corporate activity which took place during the
financial year.
Going forward, the Group's financial position becomes progressively simpler.
In February 2022 the Group concluded a reinsurance risk transfer agreement
that de-risks c.$147m of Greyhound's legacy self-insurance liabilities with a
leading non-life global speciality insurance company at a lower cash cost to
the Group than budgeted for, as well as a subsequent de-risking of other
legacy workers' compensation liabilities for $14m. These agreements reduce the
Group's exposure to Greyhound's legacy self-insurance liabilities to c.$12m of
claims not covered by the risk transfer agreements or recently settled,
primarily relating to the Canadian operations that formally closed in May 2021
having ceased operating at the start of the pandemic. The Greyhound legacy
pension obligations have also been de-risked, with the accounting deficit
reduced to £10.9m (FY 2021: £104.7m).
Following the £220m cash contribution made during the year, the First Bus and
Group defined benefit pension schemes in the UK are currently in surplus on an
accounting basis, and are progressing to self-sufficiency on a funding
valuation basis. As a result, the Group is anticipating no deficit reduction
payments will be required going forward, compared to the annual deficit
recovery payment of £30.0m in FY 2021. The Local Government Pension Schemes
(LGPS) that First Bus participates in are also very well capitalised, and
shortly after the balance sheet date, £11.8m of excess funding was returned
to the Group by a Local Government Pension Scheme in Scotland. Assuming asset
and liability performance in line with our expectations, our overall pension
position would support a potential release of up to £117m that was paid into
escrow by agreement with the First Bus and Group pension trustees over the
coming triennial valuations.
The Group is also ahead of plan to realise the previously guided c.$155m in
net value from the Greyhound assets and liabilities in the US and Canada from
FY 2023 onwards, supported by the legacy liability de-risking noted above and
the ongoing strengthening of valuations in the US commercial property market,
with a further $38.9m received in FY 2022 from properties sold since the
business disposal. The Group is in the advanced stage of a potential portfolio
sale of the remaining Greyhound properties. Collections of CARES and ARP
funding and the deferred consideration (see discontinued operations below)
continue in line with expectations.
The earnout that was included as part of the sale of the First Transit
business continues to be considered to have a carrying value of $140m in the
accounts, although the maximum potential value has increased to $290m
following post-closing contractual amendments agreed with the buyer.
The Group's main debt facility is now a £300m sustainability-linked Revolving
Credit Facility (RCF), which is undrawn, £35.5m in finance leases and our
remaining £200m bond which we expect to hold to maturity in September 2024,
at which point we would expect to repay it or to refinance at substantially
lower cost.
Capital allocation and dividends
As a result of the recent corporate activity, the Group is in a strong
financial position, is expected to generate positive free cash flow after the
sustained capital investment to deliver our commitment of a 100% zero emission
bus fleet by 2035, and has an increasing degree of confidence in the delivery
of the future sources of value noted above. As such, the Group is in a strong
position to pursue a balanced capital allocation policy in the years ahead.
The Board is therefore proposing that regular, progressive dividends begin
with a final dividend of 1.1p per share for FY 2022, in accordance with our
previously articulated policy of an annual payout around three times covered
by Group adjusted attributable profit. The Group is actively reviewing
investment in some of the substantial organic and inorganic opportunities that
exist adjacent to its existing portfolio in the UK and elsewhere, where it is
confident this will create value for shareholders, and notes the capacity to
increase gearing over time towards our target leverage ratio of less than two
times adjusted net debt: Group EBITDA adjusted for First Rail management fees,
as end market conditions and hence business performance continue to improve.
The Board also remains committed to reviewing the potential for further
additional distributions to shareholders over time.
The Board is proposing that a final dividend of 1.1p per share, resulting in a
total dividend payment of c.£ 8.1m, be paid on 19 August 2022 to shareholders
on the register at 15 July 2022, subject to approval of shareholders at the
2022 AGM.
Inflection point for public transport
In addition to our transformational transactions, the year in review has also
been an important inflection point in the operating environment for public
transport companies in the UK, and in particular for their prospects for
sustainable growth in the medium term. More than £1bn in funding was
allocated in April 2022 in support of the Government's National Bus Strategy
in England, with First Bus operating areas set to benefit significantly from
these ambitious strategies to increase bus patronage and enhance modal shift
from passenger cars in the coming years.
Moreover, passenger volumes across our businesses have increased this year, as
our economies, working and social lives continue to adapt to the aftershocks
of the pandemic restrictions. Based on our increasingly granular understanding
of our passengers' travel patterns, enabled by our industry-leading customer
data tools and analytics, we remain confident in the long-term passenger
growth potential of our First Bus operations. As we continue to focus on the
application of data and technology to volume and yield management, operating
efficiency and cost performance, First Bus is becoming a more agile business,
well placed to deliver significant operating leverage as patronage increases
over time.
The Government is also progressing the transition of the UK passenger rail
industry to a lower risk, long-term model with delivery of quality services
for passengers at its centre. With this process continuing, we have an
increasing degree of visibility on the long-duration nature of the fees to be
earned by our four incumbent management fee-based rail operations.
The Group has also begun to develop a number of growth opportunities adjacent
to its market leading UK bus and rail operations. Revenue significantly
increased this year from both Business-to-Business (B2B) contracts in First
Bus and in First Rail's activities outside of the management-fee based train
operating companies, including our open access operations, and we expect these
to become increasingly important contributors to the Group's earnings in the
coming years.
Operational highlights – First Bus
First Bus passenger volumes increased year-on-year by 91%, reflecting the
increasing propensity to travel as pandemic restrictions were reduced,
notwithstanding the reimposition of guidance to avoid travel where possible
due to the Omicron variant for a period during the second half of the
financial year.
Passenger revenue was up 49% reflecting improving volumes and yields, partly
mitigated by lower pandemic-related funding, as operations in England and
Scotland moved from broadly 'cost-plus' recovery schemes to block
subsidy-style schemes in September 2021 and April 2022 respectively. Wales
continues to operate under a cost-plus scheme until the end of July 2022.
Commercial passenger volumes are increasing faster than concessions, with
customer analytics suggesting most commercial customers are travelling again,
but not as often as before the pandemic.
Meanwhile, our new data-driven pricing strategy has begun rolling out across
our networks, including yield-enhancing changes to the construction of our
fares baskets in each local area. We modestly reduced scheduled mileage in
April 2022, and will continue to refine our networks and timetables based on
our enhanced customer analytics capability as travel patterns evolve. We
anticipate the next major milestone in this regard will be in the autumn of
2022, when the remaining recovery funding in England and Scotland is expected
to come to an end.
With industry-wide driver shortages ongoing, we continue to focus on our
driver recruitment and retention programmes, and on managing our multi-year
pay deals with local unions. Our fuel hedging programme, under which we are
87% hedged for the remainder of the current financial year, provides some time
and flexibility to respond to global fuel price changes. We expect to offset
some of the impact of higher utility costs, engineering and other materials
costs, through our fare and yield management processes.
In the year our B2B revenue increased, reflecting the buyout of our SPS joint
venture and new contracts, including a major multi-site employee shuttle
contract with a large online distributor. We are continuing to invest to
capture more of the growing pipeline of activity we see in this area. In
addition we see a number of potential opportunities as more of our fleets are
electrified, for example in third party electric vehicle charging at our
depots.
Buses have a central role to play in achieving many of society’s objectives.
The UK Government's Levelling Up White Paper, published in February 2022,
reinforced the importance of public transport connectivity. Meanwhile in the
announcement of Bus Service Improvement Plans allocations in April 2022, local
authorities in our operating areas received nearly a quarter of the funding
made available to accelerate delivery of better, more reliable services for
passengers in line with the ambitions of the National Bus Strategy.
Operational highlights – First Rail
In First Rail, our four management fee-based operations recorded profits in
line with the fixed fees plus actual or accrual of two thirds of the
performance fees, based on expected performance scoring against their
contractual metrics, with GWR and TPE slightly ahead as a result of final
settlement of certain prior-period contractual claims. Under the new contract
structures the 53% increase in like-for-like passenger journeys from these
operations had no impact on our fee income, although clearly it is encouraging
for the long-term prospects of the industry.
First Rail's open access operations also made good progress during the year,
with lower than previously guided losses as a result of strong leisure demand
since the Omicron-related restrictions were reduced and the successful launch
of Lumo in October 2021. Both are performing well in the current financial
year. Our additional services businesses in First Rail also had a good year,
with Mistral Data, London Trams, First Customer Contact and consulting ahead
of prior year partially offset by start-up costs of evo-rail.
Discontinued operations
With the completion of the sale of First Student and First Transit on 21 July
2021, the financial results of these two divisions were reported as
discontinued operations. The transaction was structured on a 'locked box'
basis as of 27 March 2021, with all economic benefits or costs for the buyer's
account from that date.
The sale of Greyhound Lines Inc was completed on 21 October 2021. Greyhound
remains eligible to receive further awards from the Coronavirus Aid, Relief,
and Economic Security (CARES) Act and American Rescue Plan (ARP) schemes and,
to the extent that such recoveries are made which relate to the period
Greyhound was under the Group's ownership, the buyer will pay equivalent
amounts to FirstGroup under the terms of the contract. Between completion of
the sale and the year end, the Group has received CARES and ARP payments of
$9.0m, $3.3m in property rentals from Greyhound as well as $11.3m in deferred
consideration with $21m still outstanding at year end. Furthermore, $38.9m has
been received in property sales proceeds and $16.5m has been paid in further
de-risking of the Greyhound pension schemes. C.$12m has been incurred in other
contractual settlements since disposal and costs incurred for the closure of
the Canadian operations.
Strong financial performance with continuing operations ahead of expectations
Revenue from continuing operations (comprising First Bus, First Rail and Group
items) increased to £4,591.1m (FY 2021: £4,318.8m), principally reflecting
improving First Bus passenger volumes partially offset by lower
pandemic-related funding receipts, and significant revenue growth in First
Rail.
Adjusted operating profit from continuing operations was ahead of expectations
at £106.7m (FY 2021: £112.2m), with First Bus in line, a stronger First Rail
performance than expected at start of year, and central cost reductions ahead
of plan. Central costs were c.£6.2m lower than in the prior year, reflecting
changes to the corporate structure implemented following the North American
disposals during the year. Adjusted EPS from continuing operations was 1.6p
(FY 2021: (2.8)p).
Discontinued operations contributed £996.9m (FY 2021: £2,526.0m) in revenue
and £120.1m in adjusted operating profit (FY 2021: £108.0m) to the Group,
reflecting part year contributions from the North American operations, now
sold, as well as there being no charge for depreciation and amortisation under
IFRS 5 from the point that the assets are classified as Held for Sale.
Statutory operating profit from continuing operations of £122.8m (FY 2021:
£171.0m) reflects £16.1m credit from net adjusting items (FY 2021: £58.8m
credit), and statutory EPS from continuing operations was (1.1)p (FY 2021:
0.9p).
Impact of First Rail fee income
The Group's accounts continue to consolidate the Train Operating Companies
which manage the four management-fee based operations, including their
substantial ring-fenced cash balances and right of use liabilities under IFRS
16, which primarily relate to the leased rolling stock used to operate these
contracts. Both ring-fenced cash and the IFRS 16 liabilities are excluded from
the Group's Adjusted Net Debt measure.
Last year the Group introduced two new alternative profit performance
measures, which focus on the contractually agreed net fees available to be
distributed up to the parent company from the management fee-based operations
(as described in more detail on pages 18 and 19) rather than their earnings,
which management believes is helpful to aid understanding of the Group's
underlying performance. The first of these, Group adjusted attributable
profit, increased by £16.3m in the year to £36.2m (FY 2021: £19.9m)
principally due to higher earnings in First Bus and lower central costs.
Meanwhile the Group's EBITDA adjusted for First Rail management fees was
£98.6m (FY 2021: £87.1m), an increase of £11.5m. As previously noted, these
metrics define our leverage and dividend policies going forward, as set out on
page 17.
Substantial adjusted cash flow in period, ahead of expectations
The Group's adjusted cash flow of £1,008.9m (FY 2021: £258.9m) in the year
reflects positive operational cash flow from the continuing divisions as well
as the disposal proceeds, offset by the repayment of debt and de-risking of
certain retained liabilities. Underlying operational cash flow under IFRS 16
before capital expenditure and lease payments in the year was £263.4m (FY
2021: £1,358.7m), ahead of expectations due to better business performance
and timing of certain working capital flows.
At year end, the Group had Adjusted Net Debt of £3.9m (FY 2021: £1,438.7m).
IFRS 16 lease liabilities (predominantly First Rail rolling stock leases in
the management fee-based operations where the Group takes no risk) decreased
to £1,083.2m (FY 2021: £1,850.0m), while ring-fenced cash was £468.1m (FY
2021: £662.9m). Taken together, reported net debt including IFRS 16 lease
liabilities and ring-fenced cash decreased to £619.0m (FY 2021: £2,625.8m).
Looking ahead
While there remains some uncertainty around the pace of recovery in light of
the evolving nature of the pandemic and the broader macroeconomic backdrop,
current trading is in line with our expectations, and the Group is expected to
make significant further progress in FY 2023 (as set out in more detail in the
divisional business reviews). This will be supplemented by a further c.£5m in
previously announced central cost reductions as we expect to exceed our target
of £10m per annum in savings compared with FY 2021 levels. Positive free cash
generation after c.£90m cash capital expenditure on First Bus zero-emission
fleet is expected to result in a small adjusted net cash position at the end
of the current financial year (before any further sources of value which may
be received).
Looking further ahead, in addition to delivering our 10% margin target and
passenger volume and yield growth, First Bus will continue to actively develop
our pipeline of growth opportunities in B2B, and will assess other adjacent
areas, to drive profitable growth in the medium term. In First Rail we expect
a broadly consistent level of contribution from First Rail's four management
fee-based operations, with further growth from open access and additional rail
services in the medium term. As indicated, the Group is also actively
reviewing investment in some of the organic and inorganic opportunities
adjacent to the existing portfolio in the UK and elsewhere, where this will
create value for shareholders.
Sustainability developments
Our commitment to transforming our bus fleet to 100% zero emissions by 2035
continues to be well-supported, with £38m and £19m in co-funding announced
from Westminster and Holyrood governments respectively during the year,
supporting our investment in more than 260 state-of-the-art, zero emission
buses.
The Group began implementing the Task Force on Climate-Related Financial
Disclosures (TCFD) recommendations in 2021, a year ahead of the regulatory
mandate, and has built on this during the FY 2022 reporting cycle. At the
Group level, we have now set a science-based target aligned with a 1.5°C
ambition to reduce Scope 1 and 2 emissions, and are completing the development
of our Scope 3 target for validation by the Science Based Target initiative.
We have strengthened our climate-related governance processes, including the
establishment during the year of the Board Responsible Business Committee to
oversee the Group's practices and performance with respect to health, safety
and sustainability, including our transition to net-zero. We have also worked
with Marsh to complete an in-depth risk scenario analysis and quantitative
financial impact assessment of our most material risks.
We continue to work to create a more diverse and inclusive business in what
has been a ‘traditional’ industry. Our women’s development programmes
are going from strength to strength, supporting women in frontline roles to
transition into their first supervisory role; and from junior managerial roles
to move into middle management. FirstGroup has also signed up to the ‘Change
the Race Ratio’ programme, which commits the Group to taking action to
increase our racial and ethnic diversity and create an inclusive culture.
First Rail is now in the second year of programmes which support the career
progression of employees from minority ethnic groups, and First Bus is now
considering a similar approach. Since 2018, we have been making steady
progress on attracting and hiring more employees from ethnically diverse
backgrounds. We increased the proportion of applicants and hires from minority
ethnic groups for the fourth successive year, with both now comparing
positively to the ethnic diversity of the UK population.
The Group entered into a £300m sustainability-linked RCF in the year, under
which the interest rate varies with the Group’s leverage and its performance
against two sustainability KPIs, being the level of Scope 1, 2 and 3 carbon
emissions per £m of revenue from its First Bus and First Rail operations, and
the relative growth of its zero emission bus fleet in the UK.
During the year the Remuneration Committee also reviewed the role of
sustainability and climate-related measures within the Group’s remuneration
approach. Accordingly, our annual and long-term incentive plans are now linked
to carbon intensity and the electrification of our transport services,
reinforcing our commitment to incorporating climate-related issues into core
business decisions.
Board changes
Last year we committed to an orderly and appropriate evolution of the Board in
order to ensure it has the right balance of skills, experience and diversity
for the Group's future needs.
As noted above, Graham Sutherland joined the Board as an Executive Director
and took up the role of Chief Executive Officer in May 2022. Graham has a
strong track record in the delivery of critical services and in creating value
for shareholders in rapidly evolving regulatory and technological
environments, including as Chief Executive Officer of KCOM Group plc, a
LSE-listed telecommunications company, and in senior executive roles within BT
Group PLC over 12 years. Graham has an established record in strategic
development, as well as delivering enhanced financial and operational
performance and engaging a diverse range of stakeholders including consumer,
business and public sector customers. I look forward to working with him to
maximise the opportunities that exist for growth and sustainable value
creation.
We also welcomed Myrtle Dawes and Claire Hawkings to the Board as independent
Non-Executive Directors in 2022, building on the appointments of Peter Lynas
and Jane Lodge in June 2021 as outlined in the Group's report and accounts
last year. Myrtle's background in managing complex, safety critical
engineering projects, as well as her wealth of knowledge and experience in
both the energy transition and improving customer service through technology,
will be of significant value to the Group. Claire is a qualified environmental
scientist and an experienced environmental, social and governance (ESG)
professional with expertise in a range of issues, including sustainability
strategy, governance, business transformation, commercial transactions,
performance management, and energy transition. Claire chairs FirstGroup's
recently established Responsible Business Committee and is a member of the
Audit Committee. Myrtle is a member of the Responsible Business Committee.
David Robbie stood down from the Board as a Director in June 2021 and Martha
Poulter, Matthew Gregory and Steve Gunning stood down from the Board in
September 2021. Warwick Brady and Julia Steyn have decided not to seek
re-election at the 2022 AGM and will therefore retire as Non-Executive
Directors at the conclusion of the meeting. I would like to thank them all for
the significant contributions they have each made to the Board and the
company. Following the Board changes over the last 12 months, the Board is now
Hampton-Alexander and Parker Review-compliant.
Our people
The dedication and resilience of our employees has been vividly demonstrated
throughout the last two years and I am extremely proud of all of our employees
who have more than risen to the challenges in support of our customers and
communities. We are deeply saddened by the loss of employees due to the
pandemic, and on behalf of the Board and all employees at FirstGroup, I offer
our heartfelt condolences and support to their families, friends and
colleagues.
Conclusion
FirstGroup has a clear purpose to provide vital transport services that
connect communities. Our services offer efficient, cost effective and
convenient travel options for passengers, both within and between the UK’s
towns and cities. As critical long-term green infrastructure, public transport
is fundamental to resolving the challenges of climate change, as well as air
quality and congestion. The connections we offer are critical enablers of
vibrant local economies and will play an important role in the UK’s
‘levelling up’ agenda and society's wider sustainability goals. I am
confident that the actions we have taken have created a focused and resilient
Group, with a strong platform from which to drive value for all our
stakeholders.
David Martin
Chairman (Interim Executive Chairman September 2021 – 30 June 2022)
14 June 2022
Divisional review
First Bus
£m £m, change in constant currency (1)
52 weeks to 26 March FY 2022 FY 2021
Revenue 789.9 698.9 +91.1
Adjusted operating profit 45.2 36.6 +8.5
Adjusted operating margin 5.7% 5.2% +40bps
EBITDA 104.4 100.8 +3.5
Net operating assets 626.4 328.1
Capital expenditure 63.2 24.0
(1 ) Based on retranslating FY 2021 foreign currency amounts at
FY 2022 rates.
First Bus reported revenue of £789.9m (FY 2021: £698.9m), principally
reflecting a 49% increase in like-for-like passenger revenue as volumes
recovered following the easing of pandemic travel restrictions, offset by
lower levels of government support.
For the full year, overall passenger volumes increased by 91% compared with
the prior year, including the temporary reduction in volumes following the
emergence of the Omicron coronavirus variant. Commercial passenger volumes for
shopping and leisure trips, discretionary travel, and journeys to and from
school and university (which together made up more than half of our patronage
pre-pandemic), have recovered well, although this is partially offset by the
increase in working from home and a slower recovery in concessionary volumes.
Overall the pace of recovery in concessionary and peak-time commuter travel
has therefore been slower, with commercial passenger volumes at 68% and
concessions at 59% of 2019 equivalent levels for the year.
For a substantial portion of FY 2022 First Bus and other regional bus
operators effectively provided their assets and expertise to operate a
government-funded bus system on a broadly cash break-even basis to ensure
continuity of service during the pandemic. Under these arrangements, called
the Covid Bus Service Support Grant-Restart (CBSSG-R) programme in England,
operators were paid the costs of operation, less revenue received from
customers and other public sector monies. Recoverable costs included all
reasonable operational costs, including depreciation and allocated debt
finance, together with any pension deficit funding.
Despite the temporary reduction in mileage in December and January due to
higher numbers of employees self-isolating due to Omicron, First Bus operated
an average of c.85% of the service mileage in FY 2022 compared with the
equivalent period in 2019.
The division reported adjusted operating profit of £45.2m (FY 2021: £36.6m)
in the year, reflecting the improvement in passenger volumes and changes in
funding models noted above, partly offset by higher service levels and
increasing utility costs. Statutory operating profit was also £45.2m (FY
2021: £30.8m).
Continued Government support as volumes rebuild
The CBSSG-R programme in England formally came to an end on 1 September 2021,
and since that time delivery of local bus services across England has been
reinforced by the DfT's £226.5m Bus Recovery Grant (BRG) package, which was
allocated to regional bus operators based on mileage and volumes. In March
2022, as travel restrictions were eased and passenger volumes continued to
rebuild, the DfT announced a further £150m in transitional funding for
regional bus and light rail operators to run until September 2022. A condition
of the transitional funding announced in March 2022 requires bus operators in
England to undertake full network reviews and determine further network
changes to help local authorities and other stakeholders understand the
viability of all routes once the funding ends in the autumn.
In early February, the Scottish Government announced a new £94m bus grant
scheme, which includes an additional £40m to support passenger volume
recovery. The scheme, which contains a profit sharing mechanism above a
certain margin, started from 1 April, replacing the existing pandemic support
arrangements and runs until the autumn 2022. The cost-plus recovery grant
scheme in Wales is currently funded to the end of July 2022.
Digital innovation
First Bus is at the forefront of the digital transformation of the bus
industry, thanks to our investment in real-time passenger volume data capture,
GPS functionality and ticketing. We now have significantly more actionable
data than in the past, transforming our ability to understand and assess
passenger flows and make commercial decisions more efficiently. We are able to
accurately observe how passenger demand patterns are evolving, which is
allowing us to optimise our networks, timetables and pricing strategies to
align with passenger needs and attract new customers. We modestly reduced
scheduled mileage from 89% to 84% of pre-pandemic levels in April 2022 in part
reflecting local driver shortage challenges, and will continue to refine our
networks and timetables based on our new customer analytics capabilities as
travel patterns evolve.
In addition, we continue to introduce new ticketing options to customers,
making use of our real-time, granular data which allows us to match our
pricing strategy to demand and customer preferences more effectively. These
measures have also included daily and weekly contactless capping fares in
Leicester, Stoke-on-Trent, Bristol and West Yorkshire in recent months, with
more areas to follow.
We also continued the roll out of innovative functionality to our customers
during FY 2022, building on our award-winning mobile app. This included
successfully launching 'tap on tap off' payment technology and ticketing
options on our buses in West Yorkshire and Glasgow. This payment technology is
now installed on half of our fleet. During the year, 70% of our ticket
transactions were completed using contactless, mobile or other digital payment
methods including our app. Not only does this deepen our knowledge of
customers' needs and enable us to structure our pricing models more
efficiently, but it also improves our overall yield by offering flexible
tickets driven by customers’ needs.
As well as investing in our data capture capability and mobile app, we are
partnering with a specialist data company to roll out their scheduling
platform across a number of our operations over the coming year. This follows
successful trials which delivered significant improvements in punctuality
throughout the day and more resource efficient operations, resulting in lower
lost mileage and positive passenger and driver feedback.
Margin improvement
In addition to the operating leverage to volume growth and the realignment of
our networks and pricing, we continued to progress the cost reduction and
operational efficiency programmes in FY 2022. To date, these have delivered
annualised savings of c.£20m since 2019, with further engineering savings
expected. In FY 2022 increases in a number of key input costs, including fuel
and utility costs, were largely offset by our fuel hedge programme which
provides flexibility to respond to changes in prices over time. We currently
have 87% of our FY 2023 exposure hedged at 37.5p per litre and FY 2024 is
currently 53% hedged at 43.3p per litre.
As a major employer, the recruitment, training and management of our employees
is a continuous focus. In FY 2022 we rolled out a number of changes to ensure
that we continue to offer an attractive and competitive employee proposition
both for our existing dedicated team and also for new and prospective
employees, as industry-wide driver shortages remain elevated. In FY 2022 we
concluded wage agreements for nearly two-thirds of our operations, a number of
which are multi-year agreements, with others anticipated to be concluded in
the next few months.
National Bus Strategy and other policy updates
Buses have a central role to play in achieving many of society’s objectives.
For example, in February 2022 the UK Government published its Levelling Up
White Paper which reinforced the central role public transport plays in
delivering economic growth and helping to create connected, vibrant and
sustainable communities. This was followed in April 2022 by the DfT’s
announcement of more than £1bn of Bus Service Improvement Plan (BSIP) funding
for 31 counties, city regions and unitary authorities throughout England.
Local areas where First Bus has a presence received nearly a quarter of the
funding commitments. We welcome this funding which will help local authorities
and bus operators accelerate the delivery of better, more reliable services
for passengers, in line with the ambitions of the National Bus Strategy.
We worked collaboratively with our local authority partners in England on
their BSIP bids. The BSIP development process highlighted – and in some
cases extended – the level of local ambitions and aspirations to work in
partnership with innovative, experienced operators to improve bus services.
The bids were bespoke to the local needs of each area and focused on actions
to improve bus priority measures including bus lanes, funded fares reductions
for certain groups of passengers, frequency and network enhancements on key
routes, and further 'capped' period ticketing schemes. The vast majority of
these measures are to be delivered in First Bus local areas through Enhanced
Partnerships (rather than franchising).
In March 2022, the Mayor of Greater Manchester announced an accelerated roll
out of a bus franchising scheme in the city region (4% of First Bus divisional
revenue in FY 2022 was in the area). As an experienced operator with
activities in a number of regions across the UK, we will assess and consider
all business models as long as we can generate value for shareholders and good
services for our customers.
In FY 2022 the Scottish Government committed to funding free bus travel for
all under-22s from 31 January 2022, which we expect should also enhance
passenger volumes over time.
Fleet decarbonisation
As leaders in sustainable mobility, we are fully aligned and working closely
with central and local governments across the UK to support the delivery of
national decarbonisation ambitions and commitments, including zero emission
bus fleets. In 2020 we announced our commitments to operate a fully zero
emission fleet by 2035 and not to order any new diesel buses after 2022. As an
early mover in the sector, and an operator who strives to deliver innovation
for customers, we are leading the industry in trialling and deploying various
modes of vehicles and technologies across our fleet and at our depots,
including electric, hydrogen and bio-methane solutions.
In electrification, we are partnering with a number of suppliers including new
bus suppliers to the market, such as Arrival, as well as working with other
longstanding partners including Alexander Dennis, Wrightbus, Yutong, Switch,
and others. We are also looking at opportunities for new sources of revenue
created by the transition of our fleet and depot infrastructure to
electricity.
In FY 2022 we continued to be successful in securing government funding
assistance for more than 260 zero emission vehicles which will more than
double our zero emission fleet. In October 2021, we were awarded £13m in
co-funding to support 68 new electric vehicles (EVs) in Leicester as part of
the first 'fast-track' round of Zero Emission Buses Regional Area (ZEBRA)
funding under the NBS. Subsequently, in March 2022, the UK Government
announced further ZEBRA funding which included £25.2m towards a total of 125
EVs in four of our areas; York, Leeds, Norfolk and Portsmouth. First Bus has
committed to invest a further £46m to help fulfil these projects over the
course of the next two years, to deliver a total of 193 new EVs in England.
First Bus will convert depots and install the necessary infrastructure to
operate these vehicles in partnership with the local electricity distribution
network operators and local authorities.
In Scotland, First Glasgow and First Aberdeen were awarded a combined £18.6m
in Transport Scotland’s Scottish Zero Emission Bus (ScotZEB) funding in
March 2022, to deliver 74 new EVs and related infrastructure across both
cities by spring 2024, with First Bus committing to invest a further £16.4m.
This new investment will see First Glasgow adding to the 126 new EVs that are
being delivered to its Caledonia depot, taking the total number of First Bus
EVs operating in Glasgow to 200 by the end of FY 2024, and accounting for more
than 40% of the total buses operating out of the two First Glasgow city
depots. First Aberdeen will have 24 new EVs, meaning its fleet will be made up
of 30% zero emission vehicles. In 2021 First Aberdeen launched the world’s
first hydrogen powered double decker buses into service in partnership with
Aberdeen City Council, and an additional ten vehicles are currently being
introduced into the fleet.
During FY 2022 our Glasgow Caledonia depot continued its transformation into
the largest electric vehicle charging hub in the UK. By the end of the
financial year all of the chargers had been installed and 95 EVs were in
operation. In November 2021, First Bus selected Hitachi Europe as prime
strategic partner for the decarbonisation programme at the Caledonia depot,
under which Hitachi will provide bus batteries 'as a service' for First
Glasgow’s electric fleet, smart charging software and will collaborate on
other low carbon technology such as solar panels and battery energy storage
solutions for the site. The depot held a joint event with Hitachi for
delegates of the UN COP26 Climate Change Conference, during which we hosted
over 1,000 visitors. First Glasgow also recorded over 137,000 delegate trips
on board our new EV fleet as a key part of the conference’s official shuttle
service.
In order to support our ambitious decarbonisation targets, we have created a
strategy to attract and retain talent and grow the future skills we know the
industry will need. As part of First Bus’ apprenticeship programme, we have
partnered with Reaseheath College in Cheshire to establish the UK’s first
bus and coach engineering academy delivering tailored training to First Bus
apprentice engineering technicians in the maintenance of next generation, zero
emission transport vehicles.
B2B and Aircoach
As an experienced operator that transports large volumes of passengers on a
daily basis, First Bus is well placed to make use of our assets and
capabilities to develop and grow our share of the B2B bus services market. In
FY 2022 we successfully grew these operations and we have further contracts in
the pipeline.
In October 2021, we acquired the 50% shareholding we did not already own in
Somerset Passenger Solutions (SPS), which operates the contract to provide
passenger transport for the construction workers employed at the EDF Hinkley
Point C nuclear power station in Somerset, for a consideration of up to £10m.
SPS employs around 450 people running a 145 vehicle operation, delivering
shuttle services seven days a week to and from the HPC site, with annual
revenues of c.£37m. In addition, First Bus was awarded significant multi-site
contracts in October 2021 to operate passenger transport services for a major
distribution centre customer.
In Ireland, we are seeing patronage numbers recovering at our Aircoach
service, following the easing of travel restrictions. We have successfully
repositioned the business for growth, increasing its network of intercity
routes, launching a new route from Galway to Dublin, implementing new digital
pricing and securing a multi-year car park contract at Dublin airport.
Looking ahead
Although clearly sensitive to the broader consumer spending outlook, we expect
First Bus volumes to continue to increase in the current financial year with
performance weighted to H2 2023, reflecting our increasing ability to adapt
operations to passenger demand and manage the inflationary environment once
recovery funding tapers off. When the current funding scheme comes to an end
in England in the autumn, we expect to implement a further round of network
realignments to ensure that our services are aligned with evolving passenger
patterns.
Looking further ahead, in addition to delivering our 10% margin target and
passenger volume and yield growth, First Bus will continue to actively develop
our pipeline of growth opportunities in B2B, and will assess other adjacent
areas including potentially some inorganic opportunities in the UK and
internationally, to drive profitable growth in the medium term.
First Rail
£m
Twelve months to 31 March FY 2022 FY 2021 £m, change
Revenue from management fee-based operations 3,762.2 3,596.7 +165.5
Revenue from open access and additional services 119.2 69.8 +49.4
Inter-divisional eliminations (80.2) (46.6) (33.6)
First Rail revenue 3,801.2 3,619.9 +181.3
Attributable net income from management fee-based operations (1) 45.5 42.3 +3.2
Gross up for tax, minorities and IFRS 16 52.0 76.2 (24.2)
Adjusted operating (loss) from open access and additional services (9.7) (10.4) +0.7
First Rail adjusted operating profit 87.8 108.1 (20.3)
(1) Represents the Group's share of the management fee income
available for dividend distribution from the GWR, SWR, TPE and WCP
(incorporating Avanti) contracts with DfT on a pre-IFRS 16 basis net of tax
and minority interests as described in more detail on pages 18 and 19. See
also note 4 to the financial statements for a reconciliation to the segmental
disclosures.
The First Rail division’s total revenue increased modestly in FY 2022 to
£3,801.2m (FY 2021: £3,619.9m). Under the contractual arrangements in place
for our four management fee-based Train Operating Companies (TOCs), changes in
passenger revenue no longer impact our financial performance during the year
and going forward. As a result, although like-for-like passenger revenues
increased relative to FY 2021, there was an offsetting reduction in income
received from the DfT.
Passenger volumes increased in FY 2022 following the easing of travel
restrictions in England from spring 2021 and again in February 2022, when the
restrictions implemented by Government in response to the Omicron variant were
eased. In the leisure market, volumes have recovered particularly well, with
demand on some flows higher than before the pandemic. We continue to work
closely with the DfT on appropriate service provision, with services running
at c.87% of 2019 equivalent levels on average during the year. We experienced
some temporary shortages of employees during FY 2022, resulting from increased
self-isolation, but this did not materially impact our financial performance.
Open access and additional services contributed £119.2m in gross revenue in
the year (FY 2021: £69.8m) before interdivisional eliminations.
In FY 2022 the four management fee-based operations delivered overall
passenger and other performance metrics in line with our expectations and
accordingly, have recorded actual performance fees and accrued for the fixed
fees plus two-thirds of the performance fees as a result.
Adjusted operating profit was £87.8m (FY 2021: £108.1m), which principally
reflects the earnings associated with the management fee-based contracts and
final agreement on contractual matters related to settlements of claims under
GWR's Direct Award and settlements at TPE relating to the pre-Emergency
Measures Agreement period. Open access losses were less than expected on
start-up of the new Lumo open access service and at Hull Trains due to
stronger than anticipated passenger demand, while the adjusted operating
profit contribution from additional services increased, with Mistral Data,
London Trams, First Customer Contact and consultancy ahead of the prior year,
partially offset by start-up costs of evo-rail. The division reported a
statutory operating profit of £91.8m (FY 2021: £203.8m) reflecting a £4.0m
final credit adjustment in relation to TPE and SWR franchise termination sums.
Rail attributable net income from management fee-based operations – being
the Group's share of the management fee income available for dividend
distribution from the GWR, SWR, TPE and WCP (incorporating Avanti) contracts
with the DfT – was £45.5m (FY 2021: £42.3m). The Group receives an annual
dividend from the TOCs reflecting the post-tax net management and performance
fees. These dividends are available to be paid after September following the
completion of the TOC audited accounts, and dividends received by the Group
from these operations in the year was £51.5m, representing attributable net
earnings up to 31 March 2021.
Transition to National Rail Contracts
At the start of the financial year all our First Rail contracts were being
operated under the terms of the emergency arrangements put in place by the UK
Government in response to the pandemic. In May 2021, SWR and TPE were the
first TOCs to transition to the Government’s new National Rail Contracts
(NRCs). Under the NRCs, the DfT retains substantially all revenue and cost
risk (including for fuel and wage increases). There is a fixed management fee
and the opportunity to earn an additional performance fee. The punctuality and
other operational targets required to achieve the maximum level of performance
fee are designed to incentivise service delivery for customers. The NRCs
achieve a more appropriate balance of risk and reward between operators and
the Government and carry no significant contingent capital risk. SWR and TPE
continue to be fully consolidated in the Group accounts with the net cost of
operations and capital expenditure to be funded in advance by the DfT. The SWR
and TPE NRCs will run to May 2023 with potential extensions to May 2025.
In March 2022 the DfT issued a Prior Information Notice which provides for a
NRC for TPE starting in Spring 2023 with a minimum core term of four years
with up to a further four years at the DfT’s discretion.
Discussions are ongoing with DfT regarding NRCs for our other two management
fee-based operations, GWR and West Coast Partnership (incorporating Avanti).
The West Coast Partnership NRC that will follow the current Emergency Recovery
Measure Agreement (which runs to October 2022) is expected to be awarded by
the DfT in autumn 2022 with a duration of up to 10 years. This is expected to
incorporate continuing as the shadow operator for HS2 before transitioning to
operating passenger services on the route when it opens in the late 2020's.
GWR's is expected to last up to six years to June 2028. In addition to the
NRCs, in FY 2022 TPE was awarded additional work to assist in the Transpennine
Route Upgrade project to upgrade railways in the North of England, worth
c.£5m in fees over two years. The work on this industry change project
further demonstrates our expertise in rail, as well as our ability to generate
earnings from additional services to the wider industry.
Beyond the NRCs, the Government have begun engaging with rail operators about
the next generation of Passenger Service Contracts which will focus private
sector operators on continuing to run services efficiently and providing
reliable and high-quality services for passengers, under the auspices of the
planned new Great British Railways organisation.
Open access operations
Our two open access operations Lumo and Hull Trains primarily serve leisure
passengers, which as a segment has seen a strong recovery in passenger demand,
in some areas reaching higher levels than before the pandemic. As a result of
this recovery in demand, both operations made good progress in FY 2022 and are
on target to deliver a profit in FY 2023. This follows a combined £16.6m loss
in FY 2022 as a result of the start-up costs for Lumo and a period of
intermittent suspensions for Hull Trains due to pandemic-related travel
restrictions, when open access operations were not eligible for emergency
pandemic support from the DfT. Having restarted operations following the
ending of lockdown restrictions in the spring, Hull Trains has seen
encouraging passenger volumes due to the strong leisure demand referenced
above.
Our Lumo open access service was successfully launched in October 2021. Its
all-electric leased fleet provides a value for money and sustainable way to
travel between London, Newcastle and Edinburgh, all routes where a significant
number of passengers still travel by air. Lumo is currently outperforming
initial expectations as a result of the successful start-up, which has
delivered strong passenger bookings and positive yields.
Customer experience
Our operations continue to make use of their industry knowledge and expertise
to work collaboratively with industry partners and stakeholders to enhance our
service offering. During FY 2022 flexible season tickets were introduced
across the country and we have continued to develop our suite of mobile
ticketing and customer apps. New functionality includes the ability for SWR
passengers to check car park capacity and a customer loyalty scheme. On 1
November 2021, SWR reopened the Isle of Wight’s railway following a £26m
investment into trains, stations and infrastructure, funded by the DfT, Isle
of Wight Council, and Solent Local Enterprise Partnership. In March 2022
Avanti became the first UK TOC to offer an additional class of travel as part
of its services, Standard Premium, which gives customers a greater choice of
facilities; and have launched a seat picker service in the year. On 20
November 2021, GWR reopened the Dartmoor Line in partnership with Devon County
Council and Network Rail, the first to be reinstated under the DfT’s
‘Restoring your Railway’ initiative.
Innovation and adjacent rail opportunities
During the year we continued to develop, market and deploy our additional rail
customer, industry and technology tools and services. Most of these were
initially developed to strengthen our offering to passengers on our large
passenger rail operations, but are increasingly being marketed to third party
operators.
Our innovative evo-rail track-to-train superfast rail-5G technology uses
trackside poles to provide a connectivity solution that we expect will improve
the passenger experience and help to encourage modal shift towards rail. The
evo-rail technology is generating strong interest, and following successful
trials on the Isle of Wight, it is being deployed on the SWR network. The
business is also conducting trials in Northern Spain, with further
negotiations in progress in the UK and abroad.
Mistral Data, our analytics business, now has 13 software systems in
operation, built on native cloud technology, allowing them to be quickly
deployed and scaled up. They range from revenue management and business
intelligence, to single views of train operations and customer transactions
that enable real-time integration and the sharing of complex data. This is
enabling our teams to identify and resolve problems before they arise, using
real-time data pulled from several systems. The software also provides
information to our customers via website and mobile app channels on the
formation and facilities available on each train, allowing them to plan their
journey with confidence.
At First Customer Contact, our passenger service centre, which was built based
on scalability and the latest technology, we further developed and integrated
a variety of customer-facing and back office functions including ticket refund
and revenue protection capability. The shared passenger service centre
operates at a lower cost than our previous outsourcing arrangements and
provides a single service for customer queries across several First Rail
operations.
We have also continued to provide our consultancy expertise as ‘shadow
operator’ to the HS2 infrastructure project during FY 2022. During the last
financial year we completed more than 36 deliverables on time and in budget.
These included technical and financial baseline reviews of operational plans
for HS2, further analysis of the travel market on the West Coast corridor to
support HS2’s objective for local economic growth, and input into the HS2
rolling stock procurement, which was awarded to a Hitachi/Alstom joint venture
in December 2021.
London Trams operated a full service throughout the year. During FY 2022
TFL’s five year periodic funding review was completed in line with
expectations.
Fleet upgrades
First Rail has an important contribution to make in meeting the challenges of
climate change, and we are working with our partners to reduce carbon
emissions through a number of initiatives including the introduction of
electric trains to replace diesel where possible. Our expertise and capability
will help the Government deliver its ambition to remove all diesel-only trains
from service in the UK by 2040.
GWR have taken delivery of the UK’s first tri-mode train which can use
overhead wires, third rail or diesel power. New suburban rolling stock for SWR
is expected to enter service this year and a new depot at Feltham was
completed in the year to stable this fleet. New all-electric and bi-mode
trains will also be introduced by Avanti in FY 2023 alongside the
refurbishment of the operator’s electric Pendolino fleet through a £117m
investment programme financed by the fleet owners Angel Trains; the first
fully refurbished Avanti Pendolino entered service in April 2022 with the
upgrade programme expected to run until 2024.
We are also working to increase connectivity with other transport modes, with
new, secure bike spaces, bus connections and car parking introduced across our
networks in the period. These included investment in a new multi-storey car
park and station forecourt upgrade completed at Taunton station in 2021, the
completion of a cycle hub at Newbury Station with 360 enclosed cycle spaces,
the roll out of secure cycle parking at ten of Avanti’s stations and
agreeing plans to construct a new £7m cycle path in Cheltenham.
Rail policy
We have long advocated for a more sustainable balance of risk and reward for
all parties which would underpin a longer-term approach to the railway with
passengers at its centre. We welcomed the Government's Williams-Shapps Plan
for Rail in May 2021, which aims to put the expertise, innovation and
experience of private sector rail operators at the heart of the new model for
providing efficient, reliable and high quality services for passengers in the
coming years. We look forward to the enabling legislation which is expected in
the next Parliament.
The rail sector is embarking on a period of reform necessary to modernise
industry practices and secure the long-term future of the industry. A number
of trade unions have announced plans for industrial action at train operating
companies across the UK and at Network Rail. Notwithstanding the fact that
under the management fee-based contracts operators bear no revenue risk and
limited cost risk, prolonged industrial action presents enormous challenges
for everyone, and most importantly for our passengers who rely on these
services to go about their daily lives. We will work closely with our industry
partners to do all that we can to minimise the effects of disruption for our
passengers.
First Rail has on average operated 20% of the UK passenger rail market by
revenue since 2007, and currently has a c.27% market share. As a result, we
have a strong track record of delivery on major projects such as fleet
introductions, capital projects on behalf of Network Rail, customer service
innovations and managing the impact of significant infrastructure changes,
from network electrification through to route upgrades, and through our
experience as a ‘shadow operator’ on the HS2 infrastructure project. We
believe this unrivalled knowledge and expertise stands us in good stead as the
industry structure in the UK continues to evolve.
As the UK’s largest operator we are well placed both to drive increased
patronage and to generate resilient and consistent returns for shareholders as
the UK passenger rail industry continues its evolution to a more
customer-focused and sustainable railway system that works better for all
parties.
Looking ahead
In FY 2023 we expect the four management fee-based operations to continue to
deliver performance metrics in line with management expectations, and with our
open access operations currently trading ahead of plan as a result of strong
leisure demand, First Rail's performance in FY 2023 is expected to reflect a
positive contribution from these businesses.
Looking further ahead, we expect a broadly consistent level of contribution
from First Rail's four management fee-based operations, with further growth
from open access and additional rail services in the medium term.
Discontinued operations – First Student, First Transit and Greyhound US
As noted elsewhere, the sale of First Student and First Transit to EQT
Infrastructure completed on 21 July 2021, and the sale of Greyhound Lines Inc
to a subsidiary of FlixMobility GmbH on 21 October 2021. (null)
First Student revenue was $669.5m or £479.5m (FY 2021: $1,617.7m or
£1,226.2m) in the period prior to completion of the sale on 21 July 2021,
reflecting the reopening of more schools compared with the prior period. At
the adjusted operating level, profit increased significantly to $123.4m or
£88.2m (FY 2021: $78.1m or £55.8m) as a result of the increased activity
levels, and no depreciation charge in the current year due to the division
being classed as held for sale. Statutory profit of £73.4m (FY 2021: £62.1m)
reflects a self-insurance provision charge due to a deterioration in respect
of prior years' insurance claims and also a one-off charge for accelerated
state and federal employment taxes.
First Transit recorded revenue of $417.7m or £299.7m (FY 2021: $1,277.4m or
£977.0m) in the period prior to completion of the sale on 21 July 2021, with
a high level of service continuing to be maintained despite the pandemic, as
it provides essential transportation options for passengers. Adjusted
operating profit was $22.1m or £15.6m (FY 2021: $69.1m or £51.7m) up to the
sale, including no depreciation charge in the current period due to the
division being classed as held for sale. The division continued to win new
business in the period, and remains well positioned for further growth.
Statutory profit of £9.1m (FY 2021: £20.5m) reflects a self-insurance
provision charge due to a deterioration in respect of prior years' insurance
claims.
Greyhound’s US operations generated revenue of $301.4m or £217.7m (FY 2021:
$422.3m or £322.8m) in the period prior to completion of the sale on 21
October 2021, reflecting an improvement in passenger demand as pandemic
restrictions eased, partially offset by lower CARES Act receipts in the
period. Through continued cost management, federal funding receipts and other
actions Greyhound was able to increase adjusted operating profit to $23.0m or
£16.3m (FY 2021: $2.0m or £0.5m) in the period prior to sale. Statutory
profit of £44.6m (FY 2021: £62.7m) reflects the partial reversal of prior
year impairments of Greyhound, gain on disposal of properties, impairment of
certain properties as well as a self-insurance provision charge due to a
deterioration in respect of prior years' insurance claims prior to the
reinsurance risk transfer agreement.
Financial review
FY 2023 financial outlook and financial policy framework
The financial outlook and financial policy framework for the ongoing Group for
the financial year ending in March 2023 (FY 2023) and beyond can be summarised
as follows:
FY 2023 outlook * While some uncertainty remains around the pace of recovery in light of the pandemic and broader macroeconomic backdrop, current trading is in line with our expectations, with the Group expected to make significant further progress
* First Bus: although sensitive to the broader consumer spending outlook, expect volumes to continue to increase with performance weighted to H2 2023, reflecting our increasing ability to adapt operations to passenger demand and manage the inflationary environment once recovery funding tapers off in the autumn
* First Rail: expect the four management fee-based operations to continue to deliver performance metrics in line with management expectations, with a positive contribution from our open access operations
* Other: on track to realise further c.£5m in previously announced central cost savings (exceeding £10m p.a. saving target over FY 2021); interest including expected NRC award for GWR c.£70m (of which c.30% cash); 19% UK corporation tax
* Cash flow: Positive free cash generation expected, resulting in a small adjusted net cash position at end of current financial year (before any further sources of value which may be received)
Investment * First Bus: c.£90m per annum in net cash capex, principally transition of bus fleet to 100% zero emissions by 2035
* First Rail: continues to be cash capital-light, with any capital expenditure required by the four management fee-based operations fully funded under the new contracts
* Growth: actively reviewing adjacent organic and inorganic opportunities in the UK and elsewhere, where this creates value for shareholders
Balance sheet * Less than 2.0x Adjusted Net Debt: rail management fee-adjusted EBITDA (1)target in the medium term
* Significant balance sheet strength
Returns for shareholders * Dividends: regular annual dividends to begin ahead of plan: final dividend of 1.1p per share proposed
* Targeting progressive dividend 3x covered by Group adjusted attributable profit (2)going forward
* Cash returns: potential for further additional distributions to shareholders over time
(1) First Bus and First Rail EBITDA from open access and additional services,
plus First Rail attributable net income from management fee-based operations,
minus central costs (see also page 19).
(2 ) First Bus and First Rail adjusted operating profit from open access
and additional services, plus First Rail attributable net income from
management fee-based operations, minus central costs, minus cash interest,
minus tax (see also page 18).
Revenue
Revenue from continuing operations increased to £4,591.1m (FY 2021:
£4,318.8m), principally reflecting improving passenger volumes in First Bus
partially offset by lower receipts from pandemic-related government grant
funding and increased revenue in First Rail.
Revenue from discontinued operations was £996.9m (FY 2021: £2,526.0m),
reflecting the trading results of First Student and First Transit in the stub
period of FirstGroup's ownership to 21 July 2021 and Greyhound's US operations
in the stub period of FirstGroup's ownership to 21 October 2021. Overall,
total revenue reduced to £5,588.0m (FY 2021: £6,844.8m), principally
reflecting the stub year contributions from discontinued operations.
52 weeks to 26 March 2022 52 weeks to 27 March 2021
Revenue Adjusted operating profit (1) Adjusted operating margin (1) Revenue £m Adjusted operating profit (1) £m Adjusted operating margin (1) %
£m £m %
First Bus 789.9 45.2 5.7 698.9 36.6 5.2
First Rail 3,801.2 87.8 2.3 3,619.9 108.1 3.0
Group items (2) - (26.3) ? (32.5)
Continuing operations 4,591.1 106.7 2.3 4,318.8 112.2 2.6
First Student 479.5 88.2 18.4 1,226.2 55.8 4.6
First Transit 299.7 15.6 5.2 977.0 51.7 5.3
Greyhound US 217.7 16.3 7.5 322.8 0.5 0.2
Discontinued operations 996.9 120.1 12.0 2,526.0 108.0 4.3
Total 5,588.0 226.8 4.1 6,844.8 220.2 3.2
North America in USD $m $m % $m $m %
First Student 669.5 123.4 18.4 1,617.7 78.1 4.8
First Transit 417.7 22.1 5.3 1,277.4 69.1 5.4
Greyhound US 301.4 23.0 7.6 422.3 2.0 0.5
Total North America (discontinued operations) 1,388.6 168.5 12.1 3,317.4 149.2 4.5
(1 ‘)Adjusted’ figures throughout this document are before the gains
on sale of the North American businesses, partial reversal of impairment
charges on Greyhound and certain other items as set out in note 4 to the
financial statements. The statutory operating profit including discontinued
operations for the year was £806.1m (FY 2021: £285.8m) as set out in note 3.
(2) Central management and other items.
Adjusted operating performance
Adjusted operating profit from continuing operations was ahead of expectations
at £106.7m (FY 2021: £112.2m), with the impact of the Omicron-related
restrictions on First Bus in the second half more than offset by a stronger
First Rail performance than was expected at the start of the year and central
cost reductions ahead of plan. Westminster and the devolved governments
continued to procure service capacity from First Bus through CBSSG-R for most
of H1 2022 in England and for the whole year in Scotland and Wales, while fee
income from the new low-risk management contracts and final settlement of
certain prior-period contractual claims in First Rail were partially offset by
open access rail losses, as previously indicated. The net impact of the
add-back under IFRS 16 in the year was £37.3m (FY 2021: £34.8m) reflecting
the currently relatively short durations of the rolling stock leases which
broadly align to the management fee-based contracts in First Rail.
Adjusted operating profit from discontinued operations of £120.1m (FY 2021:
£108.0m) relates to the part year contributions from the North American
operations, which experienced an increased volume of travel activity compared
with equivalent period in FY 2021, ongoing receipt of grant funds by Greyhound
and no depreciation being charged to the income statement in the period with
the divisions classed as held for sale under accounting rules. Overall Group
adjusted operating profit increased by £6.6m to £226.8m (FY 2021: £220.2m).
The Group's adjusted attributable profit alternative performance measure is
calculated as follows and increased considerably in the year:
52 weeks to 26 March 2022 52 weeks to 27 March 2021 £m
£m
First Bus adjusted operating profit 45.2 36.6
Attributable net income from First Rail management fee-based operations (1)– Group's share of the management fee income available for dividend distribution from GWR, SWR, TPE and WCP contracts 45.5 42.3
First Rail adjusted operating profit from open access and additional services (9.7) (10.4)
Group central costs (operating profit basis) (26.3) (32.5)
Cash interest (2) (20.7) (21.3)
Tax (3) 2.2 5.2
Group adjusted attributable profit 36.2 19.9
(1) A reconciliation to the segmental disclosures is set out in note
4.
(2) Pro forma interest charge excluding notional interest, lease
interest on IFRS 16 Right of Use assets and interest on discontinued
operations.
(3) Pro forma taxation at 19%.
A reconciliation of the Group's adjusted attributable profit measure to
adjusted earnings after tax is shown below:
FY 2022 Movements FY 2022
Group adjusted attributable profit Adjusted earnings after tax
£m £m
Adjusted First Rail earnings to IFRS 16 basis £m Gross up tax and minority interests £m Actual interest and tax £m
First Bus adjusted operating profit 45.2 - - - 45.2
Attributable net income from First Rail management fee-based operations (1) 45.5 34.0 18.0 - 97.5
First Rail adjusted operating profit from open access and additional services (9.7) - - - (9.7)
Group central costs (operating profit basis) (26.3) - - - (26.3)
Subtotal 54.7 34.0 18.0 - 106.7
Cash interest (2) (20.7) (33.1) - (28.1) (81.9)
Tax (3) 2.2 - (12.4) 7.5 (2.7)
Minority interest - - (5.6) - (5.6)
Total 36.2 0.9 - (20.6) 16.5
(1) A reconciliation to the segmental disclosures is set out in note
4.
(2) Pro forma interest charge excluding notional interest, lease
interest on IFRS 16 Right of Use assets and interest on discontinued
operations.
(3) Pro forma taxation at 19%.
The Group's EBITDA adjusted for First Rail management fees performance measure
is calculated as follows and also increased year-on-year:
52 weeks to 26 March 2022 52 weeks to 27 March 2021 £m
£m
First Bus EBITDA (1) 87.6 84.5
Attributable net income from First Rail management fee-based operations (2)– Group's share of the management fee income available for dividend distribution from GWR, SWR, TPE and WCP contracts 45.5 42.3
First Rail EBITDA from open access and additional services (1) (9.7) (8.9)
Group central costs (EBITDA basis (1)) (24.8) (30.8)
Group EBITDA adjusted for First Rail management fees 98.6 87.1
1 IAS 17 basis.
2 A reconciliation to the segmental disclosures is set out in note 4.
Reconciliation to non-GAAP measures and performance
Note 4 to the financial statements sets out the reconciliations of operating
profit/(loss) and loss before tax to their adjusted equivalents.
The principal adjusting items in relation to the continuing business are as
follows:
Gain on disposal of Greyhound Canada properties
An overall gain of £13.8m was realised on the disposal of Greyhound Canadian
properties, the largest of which was the disposal of the Toronto site.
Greyhound Canada closure
£1.7m in relation to Greyhound Canada restructuring and closure costs were
incurred during the period.
First Rail termination sums
£4.0m credit representing final adjustments of residual matters regarding the
TPE and SWR termination sums.
The principal adjusting items in relation to the discontinued operations are
as follows:
Other intangible asset amortisation charges
The amortisation charge for the year was £0.4m.
Gain on sale of First Student and First Transit
As a result of the disposal of First Student and First Transit, a gain on sale
of £501.1m was realised. This includes a gain of £450.6m as a result of the
unrealised translation reserves that have been realised on the disposal of
First Student and First Transit. This represents the cumulative foreign
currency gains on these businesses since date of original acquisition and
arises primarily from the Laidlaw acquisition in 2007 when the US Dollar rate
was approximately $2.00:£1. See note 14 for more details.
Other costs associated with the disposal of First Student and First Transit
£32.7m of costs were incurred in the year associated with the disposal of
First Student and First Transit that were not directly attributable to the
sale. These costs are therefore not included in the gain on disposal
calculation. These comprise IT and other separation related costs, certain
management bonuses and incentives triggered by the disposal, premium on
hedging costs in relation to disposal proceeds, lease termination and certain
other costs.
Gain on sale and partial reversal of prior year impairments of Greyhound
As a result of the terms of the disposal of the Greyhound US business, there
was a gain on disposal of £109.0m (including £92.8m of historic foreign
currency gains on this business) and a credit of £55.4m representing the
partial reversal of the prior years’ impairment charges on tangible fixed
assets and intangible assets which was recorded at the half year.
Other costs associated with the disposal of Greyhound
During the period there was a charge of £11.1m relating to the sale of
Greyhound comprising principally legal and professional costs and certain
other costs written off prior to disposal.
Employment taxes relating to First Student and First Transit
There was a charge of £6.6m during the period due to a one-off charge for
accelerated state and federal employment taxes in relation to First Student
and First Transit.
North American insurance provisions
During the period there was a charge of £31.5m for insurance costs comprising
£11.4m in relation to First Student and First Transit due to a deterioration
in respect of prior years’ claims, and a charge of £20.1m for additional
provisions required in Greyhound also due to a deteriorating insurance
position on prior year claims.
In addition there was a charge of £19.3m for the de-risking of legacy
Greyhound insurance liabilities representing the premium paid to de-risk these
compared to the book value of the liabilities.
Gain on disposal of properties and impairment of land and buildings
An overall gain on disposal of Greyhound US properties of £6.5m was realised
during the year.
An impairment charge of £7.2m was made on the Greyhound Miami and
Pleasantville properties as the market value of these properties was less than
the book value. It is anticipated that these properties will be disposed of in
2022 as part of a portfolio sale of the remaining Greyhound properties.
The adjusting items in relation to finance cost adjustments – continuing
operations are as follows:
Total make-whole costs (bonds and facilities)
Costs of £50.0m comprise a charge of £30.4m for the early repayment of the
$275m US Private Placement (USPP) and a charge of £19.6m for the early
repayment of the £325m 2022 bond.
Write-off of unamortised bridge, bond and facility costs
There was a charge of £8.6m for unamortised fees which had been capitalised
and were being amortised over the terms of the £325m 2022 bond, the $275m
USPP and various bank facilities, including the £800m RCF and bridge
facilities which were cancelled on completion of the sale of First Student and
First Transit.
Discontinued operations
With the completion of the sale of First Student and First Transit to EQT
Infrastructure on 21 July 2021, the financial results of the disposal group
have been classified as discontinued operations on the face of the income
statement and the balance sheet and cash flow statement adjusted accordingly.
The transaction was structured on a 'locked box' basis as of 27 March 2021,
with all economic benefits or costs for the buyer's account from that date
onwards, albeit these will continue to be disclosed as discontinued operations
up to the point of transaction completion.
On 21 October 2021 the Group announced the sale of Greyhound lines Inc. to a
wholly owned subsidiary of FlixMobility GmbH. Accordingly, Greyhound US is
also classified as discontinued operations and the retained assets and
liabilities as held for sale as at the balance sheet date. Greyhound Canadian
operations were not sold but were permanently closed in May 2021. Comparatives
for this business are included within continuing operations albeit non-core
activities.
Group statutory operating profit
Statutory operating profit from continuing operations was £122.8m (FY 2021:
£171.0m) reflecting the £16.1m credit from net adjusting items compared with
£58.8m credit in net adjusting items in FY 2021.
Finance costs and investment income
Net finance costs were £152.0m (FY 2021: £170.0m) with the decrease
principally due to lower finance costs following the repayment of leases and
debt after receipt of the First Student and First Transit disposal proceeds
partly offset by debt make-whole costs of £50.0m in total in relation to the
early settlement of the £325m 2022 bond and the $275m US Private Placement
(USPP).
Profit before tax
Statutory loss before tax was £(17.7)m (FY 2021: profit of £29.1m). Adjusted
profit before tax as set out in note 4 to the financial statements was
£133.4m (FY 2021: £50.2m) including discontinued operations. An overall
credit of £520.7m (including £58.6m of adjusting items in net finance costs)
(FY 2021: £65.6m) for adjustments principally reflecting the profit on sale
of the North American businesses and partial reversal of impairment charges on
Greyhound, resulted in a total profit before tax of £654.1m (FY 2021:
£115.8m).
Tax
The tax charge, on adjusted profit before tax including discontinued
operations for the year was £20.4m (FY 2021: £4.2m), representing an
effective tax rate of 15.3% (FY 2021: 8.4%). The increase in effective rate is
due to a significant increase in the adjusted profit before tax in the current
year, mainly due to a reduction in adjusted finance costs, resulting in the
reconciling items that reduce the tax charge (which were of a similar value to
the previous year) having a lower impact in percentage terms in the current
year. There was a tax credit of £21.8m (FY 2021: charge of £30.6m) relating
to adjusting items and a tax charge of £13.5m (FY 2021: credit of £10.1m)
from adjustments to deferred tax. The total tax charge, including tax on
discontinued operations, was £12.1m (FY 2021: £24.7m). The actual tax paid
during the year was £21.4m (FY 2021: £4.5m).
The ongoing Group's effective tax rate is expected to be broadly in line with
UK corporation tax levels (currently 19% and increasing to 25% from 1 April
2023).
EPS
Total adjusted EPS was 10.2p (FY 2021: 3.3p). Basic EPS was 60.2p (FY 2021:
6.5p).
Shares in issue
476.2m shares were acquired in December 2021 pursuant to the tender offer and
cancelled. As at 26 March 2022 there were 740.7m shares in issue (FY 2021:
1,206.4m), excluding treasury shares and own shares held in trust for
employees of 9.5m (FY 2021: 15.4m). The weighted average number of shares in
issue for the purpose of basic EPS calculations (excluding treasury shares and
own shares held in trust for employees) in the period was 1,057.5m (FY 2021:
1,203.6m).
Dividend
The Board is proposing that a final dividend of 1.1p per share, resulting in a
total dividend payment of c.£8.1m, be paid on 19 August 2022 to shareholders
on the register at 15 July 2022, subject to approval of shareholders at the
2022 AGM.
Adjusted cash flow
The Group's adjusted cash flow of £1,008.9m (FY 2021: £258.9m) in the year
reflects positive operational cash flow from the continuing divisions as well
as the disposal proceeds, offset by the repayment of debt and de-risking of
certain retained liabilities. Underlying operational cash flow under IFRS 16
before capital expenditure and lease payments in the year was £263.4m (FY
2021: £1,358.7m), ahead of expectations due to better business performance
and timing of certain working capital flows. The adjusted cash flow is set out
below:
52 weeks to 26 March 2022 52 weeks to 27 March 2021 £m
£m
EBITDA 862.1 1,178.9
Other non-cash income statement charges 3.8 9.6
Working capital (11.6) 156.7
Movement in other provisions (27.4) 72.7
Increase in financial assets/contingent consideration receivable (223.1) -
Pension payments in excess of income statement charge (340.4) (59.2)
Cash generated by operations 263.4 1,358.7
Capital expenditure and acquisitions (262.9) (391.0)
Proceeds from disposal of property, plant and equipment 23.1 119.0
Net proceeds from disposal of businesses 2,320.0 -
Interest and tax (196.6) (152.1)
Share buy back resulting from tender offer (506.0) -
Lease payments now in debt/other (632.1) (675.7)
Adjusted cash flow 1,008.9 258.9
Foreign exchange movements (3.8) 78.5
Inception of new leases 184.1 (210.2)
Lease payments now in debt 609.8 669.3
Other non-cash movements 207.8 (161.4)
Movement in net debt in the period 2,006.8 635.1
Capital expenditure
Non-First Rail cash capital expenditure was £194.3m (FY 2021: £112.0m) and
comprised First Student £72.6m (FY 2021: £50.6m), First Transit £21.8m (FY
2021: £16.2m), Greyhound £37.1m (FY 2021: £14.9m), First Bus £61.1m (FY
2021: £30.1m) and Group items £1.7m (FY 2021: £0.2m). In the year, the
First Bus average fleet age was 10.1 years (FY 2021: 9.9 years). First Rail
capital expenditure was £57.3m (FY 2021: £116.5m) and is typically matched
by receipts from the DfT under current contractual arrangements or other
funding.
In addition, during the year leases in the non-First Rail divisions were
entered into with capital values in First Student of £8.4m (FY 2021:
£37.5m), First Transit of £1.7m (FY 2021: £17.0m), Greyhound of £0.2m (FY
2021: £9.0m) and First Bus of £11.3m (FY 2021: £4.6m) and Group items
£0.8m (FY 2021: £0.3m). During the year First Rail entered into leases with
a capital value of £8.7m (FY 2021: £105.2m).
Gross capital investment (fixed asset and software additions plus the capital
value of new leases) was £374.8m (FY 2021: £516.1m) and comprised First
Student £96.1m (FY 2021: £211.5m), First Transit £13.5m (FY 2021: £37.2m),
Greyhound £37.2m (FY 2021: £14.7m), First Bus £74.5m (FY 2021: £28.6m),
First Rail £147.6m (FY 2021: £223.8m) and Group items £5.9m (FY 2021:
£0.3m). The balance between cash capital expenditure and gross capital
investment represents new leases, creditor movements and the recognition of
additional right of use assets in the year.
Funding
During the year, the Group sold First Student and First Transit to EQT
Infrastructure in July for net cash proceeds of $3,123m and has subsequently
reorganised and repaid the majority of the Group's debt arrangements. On 31
August 2021, the Group announced it had signed a new multi-year £300m
sustainability-linked RCF with a group of its relationship banks, which
contains customary financial covenants of Net Debt/EBITDA and EBITDA/Net
Interest, all as defined within the credit agreement. The new RCF replaced all
the Group's former committed syndicated and bilateral banking facilities,
which have been repaid and cancelled. The Group also repaid the UK
Government's Covid Corporate Financing Facility (CCFF) commercial paper, all
of its Private Placement debt and redeemed the £325m bonds due November
2022.The £200m September 2024 bond remains outstanding.
During the second half of FY 2022, the Group completed the tender offer which
returned £500m to shareholders in December 2021 and sold Greyhound Lines,
Inc. to FlixMobility GmbH in October 2021 for initial cash proceeds of
£100.9m, received cash proceeds from four Greyhound property sales, recovered
funding awards from CARES and ARP relating to losses incurred while Greyhound
was under the Group's ownership during the pandemic, as well as rental income
and the first tranches of the deferred consideration.
As at the year end, the Group had £532.1m of undrawn committed headroom and
free cash, being £300m (FY 2021: £346.1m) of committed headroom and £232.1m
(FY 2021: £784.5m) of net free cash after offsetting overdraft positions.
Net debt
The Group’s Adjusted Net Debt as at 26 March 2022, which excludes the effect
of IFRS 16 and the capitalisation of Right of Use Assets and ring-fenced cash
was £3.9m (FY 2021: £1,438.7m). Reported net debt was £619.0m (FY 2021:
£2,625.8m) after IFRS 16 and including ring-fenced cash of £468.1m (FY 2021:
£662.9m), as follows:
26 March 2022 27 March 2021
Analysis of net debt Total Group Cont. £m Disc. £m Total Group £m
£m
Sterling bond (2021) - 349.9 - 349.9
Sterling bond (2022) - 323.4 - 323.4
Sterling bond (2024) 199.9 199.8 - 199.8
CCFF - 298.2 - 298.2
Bank loans and overdrafts 87.5 620.1 - 620.1
Supplier financing - - 159.2 159.2
Lease liabilities 1,083.2 1,722.6 127.4 1,850.0
Asset backed financial liabilities 35.5 61.8 61.1 122.9
Senior unsecured loan notes - 198.8 - 198.8
Loan notes 0.6 0.7 - 0.7
Gross debt excluding accrued interest 1,406.7 3,775.3 347.7 4,123.0
Cash (319.6) (784.6) (49.7) (834.3)
First Rail ring-fenced cash and deposits (440.4) (638.5) - (638.5)
Other ring-fenced cash and deposits (27.7) - (24.4) (24.4)
Net debt excluding accrued interest 619.0 2,352.2 273.6 2,625.8
IFRS 16 lease liabilities – rail 1,031.2 1,601.4 - 1,601.4
IFRS 16 lease liabilities – non-rail 52.0 121.2 127.4 248.6
IFRS 16 lease liabilities – total 1,083.2 1,722.6 127.4 1,850.0
Net (cash)/debt excluding accrued interest (pre-IFRS 16) (464.2) 629.6 146.2 775.8
Adjusted Net Debt (pre-IFRS 16 and excluding ring-fenced cash) 3.9 1,268.1 170.6 1,438.7
Under the terms of the First Rail contractual agreements with the DfT, cash
can only be distributed by the TOCs either up to the lower amount of their
retained profits or the amount determined by prescribed liquidity ratios.
£51.5m has been paid in dividends from the TOCs after finalisation of their
statutory accounts to the Group during the year. The ring-fenced cash
represents that which is not available for distribution or the amount required
to satisfy the liquidity ratio at the balance sheet date.
Interest rate risk
We seek to manage our exposure to floating interest rates by ensuring that at
least 50% (but at no time more than 100%) of the Group's gross debt is fixed
rate for the medium term.
Based on the current adjusted net debt profile, the variable rate RCF is
undrawn with only finance leases and the 2024 6.875% £200m fixed rate bond
outstanding.
Fuel price risk
We use a progressive forward hedging programme to manage commodity risk. As at
June 2022, 87% of our ‘at risk’ UK crude requirement for FY 2023 (94m
litres, which is all in First Bus) were hedged at an average rate of 37.5p per
litre, and 53% of our requirements for the year to the end of March 2024 at
43.3p per litre.
Foreign currency risk
‘Certain’ and ‘highly probable’ foreign currency transaction exposures
including fuel purchases for the UK divisions 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 Group does business,
although this exposure is materially reduced following the sales of the North
American divisions. 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 order to keep the currency composition of net debt broadly
constant.
Foreign exchange
The most significant exchange rates to pounds Sterling for the Group are as
follows:
52 weeks to 26 March 2022 52 weeks to 27 March 2021
Closing rate Effective rate Closing rate Effective rate
US Dollar 1.32 1.40 1.38 1.39
Canadian Dollar 1.64 1.73 1.74 1.75
Pensions
We have updated our pension assumptions as at 26 March 2022 for the defined
benefit schemes in the UK and North America. The net pension deficit
(comprising continued and discontinued operations) of £296m at the beginning
of the year moved to a net surplus of £186.7m at the end of the year. The
movement is principally due to cash contributed to the schemes following the
sale of the North American divisions, and movements in the impacts of
actuarial assumptions driven by the financial markets. The disposal of the
FirstGroup America pension plan as part of the First Student and First Transit
transaction has also contributed to the net surplus. The main factors that
influence the balance sheet position for pensions and the principal
sensitivities to their movement at 26 March 2022 are set out below:
Movement Impact
Discount rate +0.1% Increase surplus by £26.9m
Inflation +0.1% Decrease surplus by £19.5m
Life expectancy +1 year Decrease surplus by £68.9m
The cash contributed to the legacy Greyhound pension plans has enabled us to
accelerate our de-risking of these plans, and we are developing plans for
purchasing annuities and ultimately removing these plans from the balance
sheet.
We have agreed the valuation results with the Trustees of the Group Pension
Scheme, and expect shortly to agree the results with the trustees of the First
Bus Pension schemes. We have agreed strategies with each trustee for reaching
a self-sufficiency funding target. We expect that the schemes should be able
to reach the funding target without any further contributions (this compares
with pension deficit reduction payments of c.£30.0m in FY 2021). A total of
£117m of assets were invested in Limited Partnerships following the sale of
the North American divisions, of which £95m relates to the Bus scheme and
£22m relates to the Group scheme, although we do not expect all the funds
will be required to be paid into the schemes following the triennial valuation
at April 2024 and 2030 respectively.
Shortly after the balance sheet date, £11.8m of excess funding was returned
to the Group by a Local Government Pension Scheme in Scotland. This had been
made possible by the transfer of assets and liabilities held within the
Strathclyde Pension Fund into the North East Scotland Pension Fund and a
subsequent annuity purchase.
Balance sheet
Net assets have decreased by £269.0m since 27 March 2021. The principal
reasons are the capital return of £500m to shareholders in December 2021
partly offset by the profit for the year and actuarial gains in the pension
schemes.
Balance sheets – Net assets/(liabilities) As at As at 27 March 2021 £m
26 March 2022
£m
First Bus 626.4 328.1
First Rail 597.3 925.6
Greyhound 33.7 (54.5)
Discontinued operation – First Student - 2,381.1
Discontinued operation – First Transit - 298.0
Divisional net assets 1,257.4 3,878.3
Group items 245.8 (48.1)
Net debt (619.0) (2,625.8)
Taxation 0.9 (50.3)
Total 885.1 1,154.1
Legacy North American assets and liabilities on balance sheet
As part of the disposal of First Transit to EQT, FirstGroup are entitled to an
‘earnout’ consideration of up to $290m (c.£220m). The earnout is for a
period of three years from 21 July 2021 and is calculated as a percentage of
the realised equity value on disposal of the First Transit business by EQT or
an arm's length valuation as at the third anniversary of the sale (21 July
2024) if not disposed by this point. The earnout was fair valued at 26 March
2022 using stochastic modelling of discounted cash flows and assumes EQT does
not dispose of the business by the third anniversary. Fair value was $140m
(c.£106m) as at 26 March 2022.
Greyhound is carried as available for sale at a book value of $50.8m with
expected net cash proceeds in excess of $155m principally made up of real
estate, deferred consideration and CARES/ARP collections offset by final exits
of c.$12m in legacy outstanding insurance liabilities and c.$15m in pension
liabilities.
Post-balance sheet events
* On 31 March, received £11.8m from the Aberdeen Local Government Pension
Scheme for a refund of a surplus
* Agreed additional finance leases on a pre-IFRS16 basis totalling £9.9m
* Received CARES and ARP payments totalling $4.7m
Going concern
The Board carried out a review of the Group’s financial projections for the
18 months to 30 September 2023 and having regard to the risks and
uncertainties to which the Group is exposed, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for at least the 12 month period from the date on which the
financial statements were approved. Accordingly, they continue to adopt a
going concern basis of accounting in preparing the consolidated financial
statements in this full year report. No consideration has been given to the
unsolicited, conditional proposals in relation to a possible offer for the
Group by I Squared Capital Advisors (UK) LLP as announced to the market on 26
May 2022, or any other offer for the Group that may arise, in the preparation
of the accounts.
Definitions
Unless otherwise stated, all financial figures for the 52 weeks to 26 March
2022 (the 'year' or 'FY 2022') include the results and financial position of
the First Rail business for the year ended 31 March 2022 and the results of
all other businesses for the 52 weeks ended 26 March 2022. The figures for the
52 weeks to 27 March 2021 2021 (the 'prior year' or 'FY 2021') include the
results and financial position of the First Rail business for the year ended
31 March 2021 and the results and financial position of all other businesses
for the 52 weeks ended 27 March 2021. Results for the 52 weeks to 25 March
2023 ('FY 2023') will include the results and financial position for First
Rail for the year ending 31 March 2023 and the results and financial position
of all the other businesses for the 52 weeks ending 25 March 2023.
'Cont.' or the 'Continuing operations' refer to First Bus, First Rail and
Group items.
'Disc.' or the 'Discontinued operations' refer to First Student, First Transit
and Greyhound US.
References to 'adjusted operating profit', 'adjusted profit before tax', and
'adjusted EPS' throughout this document are before the gains on sale of the
North American businesses, partial reversal of impairment charges on Greyhound
and certain other items as set out in note 4 to the financial statements.
'EBITDA’ is adjusted operating profit less capital grant amortisation plus
depreciation.
The Group's 'EBITDA adjusted for First Rail management fees' is First Bus and
First Rail EBITDA from open access and additional services, plus First Rail
attributable net income from management fee-based operations, minus central
costs.
'Group adjusted attributable profit' is First Bus and First Rail adjusted
operating profit from open access and additional services, plus First Rail
attributable net income from management fee-based operations, minus central
costs, minus cash interest, minus tax.
'Net debt' is the value of Group external borrowings excluding the fair value
adjustment for coupon swaps designated against certain bonds, excluding
accrued interest, less cash balances.
'Adjusted Net Debt' excludes ring-fenced cash and IFRS 16 lease liabilities
from net debt.
References to ‘like-for-like’ revenue adjust for changes in the
composition of the divisional portfolio, holiday timing, severe weather and
other factors, for example engineering possessions in First Rail, that distort
period-on-period trends in our businesses.
Forward-looking statements
Certain statements included or incorporated by reference within this document
may constitute ‘forward-looking statements’ with respect to the business,
strategy and plans of the Group and our current goals, assumptions and
expectations relating to our future financial condition, performance and
results. By their nature, forward-looking statements involve known and unknown
risks, assumptions, uncertainties and other factors that cause actual results,
performance or achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. No statement in this document should be construed
as a profit forecast for any period. Shareholders are cautioned not to place
undue reliance on the forward-looking statements.
Except as required by the UK Listing Rules and applicable law, the Group does
not undertake any obligation to update or change any forward-looking
statements to reflect events occurring after the date of this document.
David
Martin
Ryan Mangold
Chairman
Chief Financial Officer
14 June
2022
14 June 2022
Consolidated income statement
For the 52 weeks ended 26 March
Continuing Operations Notes 2022 £m 2021 (restated) £m
Revenue 2 4,591.1 4,318.8
Operating costs (4,468.3) (4,147.8)
Operating profit 122.8 171.0
Investment income 5 1.1 1.8
Finance costs 5 (141.6) (143.7)
(Loss)/profit before tax (17.7) 29.1
Tax 6 11.9 (6.3)
Loss/(profit) from continuing operations (5.8) 22.8
Profit from discontinued operations 14 647.8 68.3
Profit for the year 642.0 91.1
Attributable to:
Equity holders of the parent 636.4 78.4
Non-controlling interests 5.6 12.7
642.0 91.1
Earnings per share
Earnings per share for (loss)/profit from continuing operations attributable to the ordinary
equity holders of the company
Basic earnings per share (1.1)p 0.9p
Diluted earnings per share (1.1)p 0.9p
Earnings per share for profit/(loss) attributable to the ordinary equity holders of the company
Basic earnings per share 7 60.2p 6.5p
Diluted earnings per share 7 60.2p 6.4p
Adjusted results (from continuing operations) (1)
Adjusted operating profit 4 106.7 112.2
Adjusted profit/(loss) before tax 24.8 (29.7)
Adjusted EPS 7 1.6p (2.8)p
Adjusted diluted EPS 1.5p (2.8)p
1 Adjusted for certain items as set
out in note 4.
Prior year restatements are detailed in note 1.
The accompanying notes form an integral part of this consolidated income
statement.
Consolidated statement of comprehensive income
52 weeks ended 26 March
2022 £m 2021 (restated) £m
Profit for the year 642.0 91.1
Items that will not be reclassified subsequently to profit or loss
Actuarial gains/(losses) on defined benefit pension schemes 122.3 (49.3)
Deferred tax on actuarial losses on defined benefit pension schemes (22.1) 15.5
100.2 (33.8)
Items that may be reclassified subsequently to profit or loss
Derivative hedging instrument movements 43.9 16.4
Deferred tax on derivative hedging instrument movements (10.8) (3.6)
Exchange differences on translation of foreign operations - continuing operations (5.6) 1.3
Exchange differences on translation of foreign operations - discontinued operations 0.3 (112.2)
Non-controlling interests share of loan waived 35.4 –
Reclassification of foreign currency translation reserve on discontinued operations (see note 14) (543.4) –
(480.2) (98.1)
Other comprehensive loss for the year (415.4) (131.9)
Total comprehensive income/(loss) for the year 262.0 (40.8)
Attributable to:
Equity holders of the parent 221.0 (53.5)
Non-controlling interests 41.0 12.7
262.0 (40.8)
Total comprehensive income/(loss) for the year attributable to owners of FirstGroup Plc arises from:
Attributable to:
Continuing operations 149.1 (49.3)
Discontinued operations 112.9 8.5
262.0 (40.8)
Prior year restatements are detailed in note 1.
The accompanying notes form an integral part of this consolidated statement of
comprehensive income.
Consolidated balance sheet
As at 26 March
Notes 2022 £m 2021 £m
Non-current assets
Goodwill 8 93.5 83.9
Other intangible assets 9 12.4 16.2
Property, plant and equipment 10 1,692.7 2,443.7
Contingent consideration receivable 12 106.1 –
Deferred tax assets 19 36.1 35.0
Retirement benefit assets 203.0 52.9
Derivative financial instruments 18 4.2 1.2
Financial asset 117.0 –
Investments 2.2 8.3
2,267.2 2,641.2
Current assets
Inventories 11 28.9 29.4
Trade and other receivables 12 682.3 676.7
Current tax assets 3.1 0.4
Cash and cash equivalents 787.7 1,438.9
Derivative financial instruments 18 26.2 14.9
1,528.2 2,160.3
Assets held for sale – continuing operations – 11.9
Assets held for sale – discontinued operations 14 38.5 3,479.5
Total assets 3,833.9 8,292.9
Current liabilities
Trade and other payables 13 1,245.1 1,587.6
Tax liabilities – Current tax liabilities – 14.4
– Other tax and social security 38.3 34.6
Borrowings 15 677.0 1,326.2
Derivative financial instruments 18 – 11.8
Provisions 20 114.6 74.4
Current liabilities 2,075.0 3,049.0
Liabilities held for sale - discontinued operations 14 – 1,136.6
2,075.0 4,185.6
Net current liabilities (546.8) (888.7)
Non-current liabilities
Borrowings 15 736.8 2,492.0
Derivative financial instruments 18 – 1.2
Retirement benefit liabilities 16.3 324.5
Provisions 20 120.7 135.5
873.8 2,953.2
Total liabilities 2,948.8 7,138.8
Net assets 885.1 1,154.1
Equity
Share capital 21 37.5 61.1
Share premium 692.8 689.6
Hedging reserve 19.3 (3.4)
Other reserves 22.4 4.6
Own shares (9.0) (9.0)
Translation reserve (24.0) 524.7
Retained earnings/(deficit) 137.6 (89.6)
Equity attributable to equity holders of the parent 876.6 1,178.0
Non-controlling interests 8.5 (23.9)
Total equity 885.1 1,154.1
The accompanying notes form an integral part of this consolidated balance
sheet.
Ryan Mangold
14 June 2022
Consolidated statement of changes in equity
52 weeks ended 26 March
Share capital (note 21) £m Share premium £m Hedging reserve £m Other reserves £m Own shares £m Translation reserve £m Retained earnings £m Total £m Non- controlling interests £m Total equity £m
Balance at 29 March 2020 61.0 688.6 (28.3) 4.6 (10.2) 635.6 (141.5) 1,209.8 (33.1) 1,176.7
Profit for the year – – – – – – 78.4 78.4 12.7 91.1
Other comprehensive income/(loss) – – 12.8 – – (110.9) (33.8) (131.9) – (131.9)
for the year
Total comprehensive (loss)/income for – – 12.8 – – (110.9) 44.6 (53.5) 12.7 (40.8)
the year
Shares issued 0.1 1.0 – – – – – 1.1 – 1.1
Derivative hedging instrument movements transferred to balance sheet (net of tax) – – 15.2 – – – – 15.2 – 15.2
Reserves reclassification – – (3.1) – – – 3.1 – – –
Dividends paid/other – – – – – – (1.6) (1.6) (3.5) (5.1)
Movement in EBT and treasury shares – – – – 1.2 – (6.1) (4.9) – (4.9)
Share-based payments – – – – – – 11.9 11.9 – 11.9
Balance at 27 March 2021 61.1 689.6 (3.4) 4.6 (9.0) 524.7 (89.6) 1,178.0 (23.9) 1,154.1
Balance at 28 March 2021 61.1 689.6 (3.4) 4.6 (9.0) 524.7 (89.6) 1,178.0 (23.9) 1,154.1
Profit for the year – – – – – – 636.4 636.4 5.6 642.0
Other comprehensive income/(loss) – – 33.1 – – (548.7) 100.2 (415.4) 35.4 (380.0)
for the year
Total comprehensive income/(loss) for – – 33.1 – – (548.7) 736.6 221.0 41.0 262.0
the year
Shares issued 0.2 3.2 – – – – – 3.4 – 3.4
Shares bought back and cancelled (23.8) – – 17.8 – – (500.0) (506.0) – (506.0)
Derivative hedging instrument movements transferred to balance sheet (net of tax) – – (10.4) – – – – (10.4) – (10.4)
Disposal of non-controlling interest in First Transit – – – – – – – – (0.7) (0.7)
Dividends paid/other – – – – – – 2.0 2.0 (7.9) (5.9)
Movement in EBT and treasury shares – – – – – – (16.8) (16.8) – (16.8)
Share-based payments – – – – – – 5.4 5.4 – 5.4
Balance at 26 March 2022 37.5 692.8 19.3 22.4 (9.0) (24.0) 137.6 876.6 8.5 885.1
The accompanying notes form an integral part of this consolidated statement of
changes in equity.
Consolidated cash flow statement
52 weeks ended 26 March
Notes 2022 £m 2021 (restated) £m
Cash generated by operations 22 263.4 1,358.7
Tax paid (21.4) (4.5)
Interest paid (176.6) (149.8)
Net cash from operating activities 22 65.4 1,204.4
Investing activities
Interest received 1.4 2.0
Proceeds from disposal of property, plant and equipment 23.1 119.0
Purchases of property, plant and equipment (241.9) (416.5)
Purchases of software (9.7) (4.1)
Net proceeds from disposal of subsidiaries (net of cash disposed) (1) 2,320.0 –
Acquisition of businesses (11.3) (1.4)
Net cash used in investing activities 2,081.6 (301.0)
Financing activities
Shares purchased by Employee Benefit Trust (23.5) (4.7)
Shares issued 2.9 0.5
Shares bought back and costs directly associated with tender offer (506.0) –
(Repayment of)/proceeds from CCFF (298.2) 298.2
Repayment of bonds (674.4) –
Repayment of senior unsecured loans (200.0) –
Drawdowns from bank facilities – 117.7
Repayment of bank facilities (579.3) (89.6)
Repayment of loan notes – (8.7)
Repayment of lease liabilities (600.4) (685.0)
(Repayment of)/proceeds from asset backed financial liabilities (9.4) 46.8
Fees for finance facilities (1.7) (2.1)
Net cash flow used in financing activities (2,890.0) (326.9)
Net (decrease)/increase in cash and cash equivalents before foreign exchange movements (743.0) 576.5
Cash and cash equivalents at beginning of year 1,443.4 886.5
Foreign exchange movements (0.2) (19.6)
Cash and cash equivalents at end of year 700.2 1,443.4
(1) £2,320.0m comprises cash consideration of £2,478.7m less cash and cash
equivalents sold of £158.7m per note 14 (b) and (c).
FY 2021 comparatives have been restated as follows. 'Purchases of property,
plant and equipment' have increased by £31.0m, 'Repayments of lease
liabilities' have decreased by £15.8m and 'Proceeds from financial
liabilities' have increased by £46.8m. See note 2 for further details.
The line Purchases of property, plant and equipment includes cash flows from
both purchased assets and purchased assets from within a disposal group
previously classified as assets held for sale.
Cash flows of discontinued operations are shown on note 14.
2022 £m 2021 £m
Reconciliation to cash flow statement
Cash and cash equivalents – Balance Sheet 787.7 1,438.9
Cash and cash equivalents – Held for Sale – 58.3
Cash and cash equivalents – total operations 787.7 1,497.2
Bank overdraft (87.5) (53.8)
Cash and cash equivalents at end of year per consolidated balance sheet 700.2 1,443.4
Note to the consolidated cash flow statement – reconciliation of net cash
flow to movement in net debt
2022 £m 2021 (restated) £m
Net (decrease)/increase in cash and cash equivalents in year (743.0) 576.5
Decrease/(increase) in debt excluding leases 1,751.9 (317.6)
Adjusted cash flow 1,008.9 258.9
Payment of lease liabilities 609.8 669.3
Net inception of new leases 184.1 (210.2)
Fees capitalised against bank facilities and bond issues – 2.1
Foreign exchange movements (3.8) 78.5
Other non-cash movements 207.8 (163.5)
Movement in net debt in year 2,006.8 635.1
Net debt at beginning of year (2,625.8) (3,260.9)
Net debt at end of year (619.0) (2,625.8)
Prior year restatements are detailed in note 1.
Other non-cash movements consist of movements in supplier financing of
£159.2m (2021: £(159.2)m), transfer of asset backed financial liabilities of
£61.0m (2021: £nil) on sale of disposal First Student and First Transit,
amortisation of debt issue fees of £12.4m (2021: £(3.2)m) and other non-cash
movements of £nil (2021: £(1.1)m).
Supplier Financing are amounts due to the principal supplier of school buses
in the US and Canada for deliveries of vehicles. As the ageing of these
payables exceed 6 months interest starts to be charged and they are
subsequently transferred from trade payables to borrowings. On completion of
the sale of First Student & First Transit, this liability was transferred to
EQT Infrastructure (EQT).
Management considers that adjusted cash flow is an appropriate measure for
assessing the Group cash flow as it is the measure that is used to assess both
Group and divisional cash performance against budgets and forecasts. Adjusted
cash flow is stated prior to cash flows in relation to debt excluding leases.
This is a change and a restatement from the treatment reported in the
financial statement for the 52 weeks to 27 March 2021 when adjusted cashflow
was stated prior to cash flows in relation to debt and to finance leases.
The accompanying notes form an integral part of this consolidated cash flow
statement.
Notes to the consolidated financial statements
1 General information
The financial information set out above does not constitute the Company’s
Statutory Accounts for the 52 weeks ended 26 March 2022 or 27 March 2021, but
is derived from those accounts. Statutory Accounts for 2021 have been
delivered to the Registrar of Companies and those for 2022 will be delivered
following the Company’s Annual General Meeting. The auditors have reported
on both sets of account; their reports were unqualified and did not contain
statements under section 498 (2) or (3) of the Companies Act 2006.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not in itself contain sufficient information
to comply with IFRSs. The Company expects to publish full financial statements
that comply with IFRSs in June 2022. Copies of the Statutory Accounts for the
52 weeks ended 26 March 2022 will be available to all shareholders in June and
will also be available thereafter at the Registered Office of the Company at
395 King Street, Aberdeen, AB24 5RP.
Basis of accounting
The financial statements have been prepared in accordance with IFRSs in
conformity with the requirements of the Companies Act 2006 (IFRS) and the
applicable legal requirements of the Companies Act 2006. In addition to
complying with international accounting standards in conformity with
requirements of the Companies Act 2006.
The consolidated financial statements of FirstGroup plc comply with UK-adopted
international accounting standards and with the requirements of the Companies
Act 2006. These financial statements are also prepared in accordance with
IFRSs’ as issued by the IASB, including interpretations issued by the IFRS
Interpretations Committee, as there are no applicable differences from IFRSs
as issued by the IASB for the periods presented. There were no unendorsed
standards effective for the period ended 26 March 2022 affecting these
consolidated and separate financial statements.
The financial statements have been prepared on the historical cost basis,
except for the revaluation of certain financial instruments, and on a going
concern basis.
The Group has undertaken detailed reviews of the potential impact of recovery
from coronavirus using financial outlook modelling. Based on their review of
the financial forecasts and having regard to the risks and uncertainties to
which the Group is exposed, the Directors believe that the Company and the
Group have adequate resources to continue in operational existence for at
least a twelve-month period from the date on which the financial statements
were approved. Accordingly, the financial statements have been prepared on a
going concern basis.
The financial statements for the 52 weeks ended 26 March 2022 include the
results and financial position of the First Rail business for the year ended
31 March 2022 and the results and financial position of all the other
businesses for the 52 weeks ended 26 March 2022. The financial statements for
the 52 weeks ended 27 March 2021 include the results and financial position of
the First Rail businesses for the year ended 31 March 2021 and the results
and financial position of all the other businesses for the 52 weeks ended 27
March 2021.
Restatements
During the year the Financial Reporting Council (FRC) enquired about certain
sale and leaseback transactions and certain lease buy outs which occurred in
the 52 weeks ended 27 March 2021. As a result of this enquiry, management
reassessed the accounting treatment adopted for these transactions. Since the
leasing arrangements included buy-back options, management concluded that they
did not constitute sale and lease-back transactions. Rather these arrangements
should have been accounted for as financing transactions in which the
underlying assets were not derecognised. In the FY 2021 consolidated cash flow
statement, the proceeds of these transactions had been incorrectly netted off
purchases of PPE (£46.8m). The liabilities associated with these assets were
classified as lease liabilities as at 27 March 2021 whereas they should have
been classified as asset backed financial liabilities. The investment income
and finance costs note (note 5), borrowings note (note 15) and the liabilities
note (note 16) have been updated to reclassify these balances accordingly. The
other Impacts of this change in accounting treatment have been assessed to be
immaterial.
In addition, certain lease buy outs of £15.8 m had been incorrectly included
in purchases of PPE rather than as a repayment of lease liabilities.
Accordingly, the comparatives for FY 2021 consolidated cash flow statement and
balance sheet notes to the accounts for borrowings notes have been restated.
In the consolidated cash flow statement "purchases of property, plant and
equipment" have increased by £31.0m, "repayments of lease liabilities" have
Increased by £15.8m and a new line "proceeds from asset backed financial
liabilities" of £46.8m is presented.
The results for the 52 weeks to 27 March 2021 have been restated since they
have been split into the results for the continuing operations and the results
for the discontinued operations. Discontinued operations now include
Greyhound entities which were sold in the year.
Adoption of new and revised standards
The accounting policies adopted are consistent with those of the previous
financial year except for the changes arising from new standards and
amendments to existing standards which have been adopted in the current year.
Adoptions in the current year include amendments to IAS 1 ‘Presentation of
Financial Statements’, amendments to IFRS3 ‘Business Combinations’ and
Phase 2 of the ‘Interest Rate Benchmark Reform’. There has been no
material change as a result of applying these amendments and no significant
impact is expected from any of the future standards and amendments that are
visible.
2 Revenue
2022 £m 2021 (restated) £m
Services rendered 2,537.0 967.3
First Rail contract subsidy receipts 1,662.1 2,905.9
Other revenues 392.0 445.6
Revenue from continuing operations 4,591.1 4,318.8
Discontinued operations 996.9 2,526.0
Revenue 5,588.0 6,844.8
The results for the 52 weeks to 27 March 2021 have been restated since they
have been split into the results for the continuing operations and the results
for the discontinued operations. Discontinued operations now includes
Greyhound entities which were sold in the year.
3 Business segments and geographical information
For management purposes, the Group was organised into five operating divisions
– First Student, First Transit, Greyhound, First Bus and First Rail. First
Student and First Transit were categorised as Discontinued Operations at 27
March 2021 and the sale of these completed on 21 July 2021. Greyhound was
categorised as Discontinued Operations at 25 September 2021 and the sale of
this completed on 21 October 2021.The divisions are managed separately in line
with the differing services that they provide and the geographical markets
which they operate in. There is a clear distinction between each division and
no judgement is required to identify each reportable segment. The segment
results for the 52 weeks ended 26 March 2022 are as follows:
Continuing Operations Discontinued Operations
First Bus £m First Rail £m Grey-hound £m Group items (1) £m Continuing Operations £m First Student £m First Transit £m Grey-hound £m Group items (1) £m Total £m
Passenger revenue 570.0 1,886.4 – – 2,456.4 – – 150.4 – 2,606.8
Contract revenue 80.6 – – – 80.6 450.3 203.2 – – 734.1
Charter/private hire – – – – – 21.8 0.1 0.9 – 22.8
Rail contract subsidy receipts – 1,662.1 – – 1,662.1 – – – – 1,662.1
Other revenues 139.3 252.7 – – 392.0 7.4 96.4 66.4 – 562.2
Revenue 789.9 3,801.2 – – 4,591.1 479.5 299.7 217.7 – 5,588.0
EBITDA (2) 104.4 649.9 – (23.1) 731.2 88.2 15.6 27.1 – 862.1
Depreciation (63.3) (669.5) – (2.6) (735.4) – – (11.0) – (746.4)
Software amortisation (1.6) (2.1) – (0.6) (4.3) – – (0.4) – (4.7)
Capital grant amortisation 5.7 109.5 – - 115.2 – – 0.6 – 115.8
Segment results 45.2 87.8 – (26.3) 106.7 88.2 15.6 16.3 – 226.8
Other intangible asset amortisation charges – – – – – – – (0.4) – (0.4)
Other adjustments (note 4) – 4.0 12.1 – 16.1 (14.8) (6.5) 28.7 556.2 579.7
Operating profit/(loss) (3) 45.2 91.8 12.1 (26.3) 122.8 73.4 9.1 44.6 556.2 806.1
Investment income – 0.6 – 0.5 1.1 – – 0.4 – 1.5
Finance costs (2.8) (37.6) (1.1) (100.1) (141.6) (7.5) (0.7) (3.7) – (153.5)
Profit before tax 42.4 54.8 11.0 (125.9) (17.7) 65.9 8.4 41.3 556.2 654.1
Tax (12.1)
Profit after tax 642.0
1 Group items comprise central management and other items.
2 EBITDA is adjusted operating profit less capital grant
amortisation plus depreciation plus software amortisation.
3 Although the segment results are used by management to measure
performance, statutory operating profit by operating division is disclosed for
completeness.
The segment results for the 52 weeks ended 27 March 2021 are as follows:
Continuing Operations Discontinued Operations
First Bus £m First Rail £m Grey-hound £m Group items (1) £m Continuing Operations £m First Student £m First Transit £m Grey-hound £m Group items (1) £m Total £m
Passenger revenue 383.1 537.7 – – 920.8 – – 179.1 – 1,099.9
Contract revenue 46.5 – – – 46.5 1,191.8 867.1 – – 2,105.4
Charter/private hire – – – – – 18.1 0.6 1.3 – 20.0
Rail contract subsidy receipts – 2,905.9 – – 2,905.9 – – – – 2,905.9
Other 269.3 176.3 – – 445.6 16.3 109.3 142.4 – 713.6
Revenue 698.9 3,619.9 – – 4,318.8 1,226.2 977.0 322.8 – 6,844.8
EBITDA (2) 100.8 711.1 – (29.1) 782.8 282.6 87.1 26.4 – 1,178.9
Depreciation (68.7) (607.9) – (2.8) (679.4) (223.6) (32.9) (24.8) – (960.7)
Software amortisation (1.4) (1.4) – (0.6) (3.4) (3.2) (2.5) (2.2) – (11.3)
Capital grant amortisation 5.9 6.3 – – 12.2 – – 1.1 – 13.3
Segment results 36.6 108.1 – (32.5) 112.2 55.8 51.7 0.5 – 220.2
Other intangible asset amortisation charges – – (0.2) – (0.2) (3.0) – (0.9) – (4.1)
Other adjustments (note 4) (5.8) 95.7 (20.9) (10.0) 59.0 9.3 (31.2) 63.1 (30.5) 69.7
Operating profit/(loss) (3) 30.8 203.8 (21.1) (42.5) 171.0 62.1 20.5 62.7 (30.5) 285.8
Investment income – 1.6 – 0.2 1.8 0.2 – – – 2.0
Finance costs (2.6) (55.7) (1.1) (84.3) (143.7) (17.8) (3.4) (7.1) – (172.0)
Profit before tax 28.2 149.7 (22.2) (126.6) 29.1 44.5 17.1 55.6 (30.5) 115.8
Tax (24.7)
Profit after tax 91.1
1 Group items comprise central management and other items.
2 Adjusted EBITDA is adjusted operating profit less capital grant
amortisation plus depreciation plus software amortisation.
3 Although the segment results are used by management to measure
performance, statutory operating profit by operating division is disclosed for
completeness.
4 Reconciliation to non-GAAP measures and performance
In measuring the Group and divisional adjusted operating performance,
additional financial measures derived from the reported results have
been used in order to eliminate factors which distort year-on-year
comparisons. The Group’s adjusted performance is used to explain
year-on-year changes when the effect of certain items that are significant,
including gains on disposal of businesses (including cumulative foreign
currency gains in the businesses), restructuring and reorganisation costs,
material property gains or losses, aged legal and self-insurance claims,
significant adverse development factors on insurance provisions, onerous
contract provisions, impairment charges and pension settlement gains or
losses. In addition, management assess divisional performance before other
intangible asset amortisation charges as these are typically a result of Group
decisions and therefore the divisions have little or no control over these
charges. Management consider that this overall basis more appropriately
reflects operating performance and provides a better understanding of the KPIs
of the business.
Reconciliation of operating profit to adjusted operating profit on a continuing basis 52 weeks ending 26 March 2022 £m 52 weeks ending 27 March 2021 (restated) £m
Operating profit on a continuing basis 122.8 171.0
Adjustments for:
Other intangible asset amortisation charges – 0.2
Strategy costs – (0.9)
Impairment of land and buildings – 16.6
Rail termination sums net of impairment reversal (4.0) (95.7)
(Gain)/loss on disposal of properties (13.8) 0.7
Greyhound Canada 1.7 20.3
Total operating profit adjustments on a continuing basis (16.1) (58.8)
Adjusted operating profit on a continuing basis (note 3) 106.7 112.2
Reconciliation of operating profit/(loss) to adjusted operating profit on a discontinued basis 52 weeks ending 26 March 2022 £m 52 weeks ending 27 March 2021 (restated) £m
Operating profit from discontinued operations 683.3
Gain on sale of First Student and First Transit (501.1)
Gain on sale of Greyhound (109.0)
Operating profit from discontinued operations (excluding gain on sale of First Student, First Transit and Greyhound) 73.2 114.8
Adjustments for:
Other intangible asset amortisation charges 0.4 3.9
Other costs associated with the disposal of First Student and First Transit 32.7 –
Other costs associated with the disposal of Greyhound 11.1 –
Greyhound insurance de-risking 19.3 –
Employment taxes relating to First Student and First Transit 6.6 –
Partial reversal of prior year impairments of Greyhound (55.4) –
Impairment of land and buildings 7.2 –
Strategy costs – 28.9
Gain on disposal of properties (6.5) (71.8)
North America insurance provisions 31.5 32.2
Total operating profit adjustments from discontinued operations (excluding gain on sale of First Student, First Transit and Greyhound) 46.9 (6.8)
Adjusted operating profit from discontinued operations 120.1 108.0
Reconciliation of profit/(loss) before tax to adjusted profit before tax and adjusted earnings 52 weeks ending 26 March 2022 £m 52 weeks ending 27 March 2021 (restated) £m
Profit before tax (including discontinued operations) 654.1 115.8
Adjusting operating profit adjustments – continuing operations (16.1) (58.8)
Adjusting operating profit adjustments – discontinued operations excluding gain on sale 46.9 (6.8)
Gain on sale of First Student and First Transit (501.1) –
Gain on sale of Greyhound (109.0) –
Operating profit adjustments – total operations (579.3) (65.6)
Adjusting finance cost items – continuing operations 58.6 –
Adjusted profit before tax including discontinued operations 133.4 50.2
Adjusted tax charge (20.4) (4.2)
Non-controlling interests (1) (5.6) (6.1)
Adjusted earnings including discontinued operations 107.4 39.9
(1) Statutory non-controlling interests in 2022 principally reflect Avanti
West Coast and South Western Railway. Statutory non-controlling interests in
2021 principally reflect Avanti West Coast. Adjusted non-controlling interests
of £nil (2021: £6.6m) relate to termination sums and other adjustments at
South Western Railway.
The results for the 52 weeks to 27 March 2021 have been restated since they
have been split into the results for the continuing operations and the results
for the discontinued operations. Discontinued operations now includes
Greyhound entities which were sold in the year.
4 Reconciliation to non-GAAP measures and performance (continued)
Reconciliation of tax charge to adjusted tax charge 52 weeks ending 26 March 2022 £m 52 weeks ending 27 March 2021 £m
Tax charge (note 6) 12.1 24.7
Tax effect of adjusting items (note 7) 21.8 (30.6)
Adjustments attributable to changes in tax rates and laws 1.4 –
Write back of previously unrecognised deferred tax assets (note 7) 25.7 10.1
Write down of previously recognised deferred tax assets (note 7) (40.6) –
Adjusted tax charge (including discontinued) 20.4 4.2
The principal adjusting items in relation to the continuing business are as
follows:
Gain on disposal of properties
An overall gain of £13.8m (2021: loss of £0.7m) was realised on the disposal
of Greyhound Canadian properties, the largest of which was the disposal of the
Toronto site.
Greyhound Canada closure
£1.7m (2021: £10.8m) in relation to Greyhound Canada restructuring and
closure costs were incurred during the period.
First Rail termination sums net of impairment reversal
£4.0m (2021: £95.7m) credit representing final adjustments of residual
matters regarding the TPE and SWR termination sums.
The principal adjusting items in relation to the discontinued operations are
as follows:
Other intangible asset amortisation charges
The amortisation charge for the year was £0.4m.
Gain on sale of First Student and First Transit
As a result of the disposal of First Student and First Transit, a gain on sale
of £501.1m was realised. This includes a gain of £450.6m as a result of the
unrealised translation reserves that have been realised on the disposal of
First Student and First Transit. This represents the cumulative foreign
currency gains on these businesses since date of original acquisition and
arises primarily from the Laidlaw acquisition in 2007 when the US Dollar rate
was approximately $2.00:£1. See note 14 for more details.
Other costs associated with the disposal of First Student and First Transit
£32.7m of costs were incurred in the year associated with the disposal of
First Student and First Transit that were not directly attributable to the
sale. These costs are therefore not included in the gain on disposal
calculation. These comprise IT and other separation related costs, certain
management bonuses and incentives triggered by the disposal, premium on
hedging costs in relation to disposal proceeds, lease termination and certain
other costs.
Gain on sale and partial reversal of prior year impairments of Greyhound
As a result of the terms of the disposal of the Greyhound US business, there
was a gain on disposal of £109.0m (including £92.8m of historic foreign
currency gains on this business) and a credit of £55.4m representing the
partial reversal of the prior years’ impairment charges on tangible fixed
assets and intangible assets which was recorded at the half year. See note 14
for more details.
Other costs associated with the disposal of Greyhound
During the period there was a charge of £11.1m relating to the sale of
Greyhound comprising principally legal and professional costs and certain
other costs written off prior to disposal.
Employment taxes relating to First Student and First Transit
There was a charge of £6.6m during the period due to a one-off charge for
accelerated state and federal employment taxes in relation to First Student
and First Transit.
North American insurance provisions
During the period there was a charge of £31.5m for insurance costs comprising
£11.4m in relation to First Student and First Transit due to a deterioration
in respect of prior years’ claims, and a charge of £20.1m for additional
provisions required in Greyhound also due to a deteriorating insurance
position on prior year claims.
In addition there was a charge of £19.3m for the de-risking of legacy
Greyhound insurance liabilities representing the premium paid to de-risk these
compared to the book value of the liabilities.
Gain on disposal of properties and impairment of land and buildings
An overall gain on disposal of Greyhound US properties of £6.5m was realised
during the year.
An impairment charge of £7.2m was made on the Greyhound Miami and
Pleasantville properties as the market value of these properties was less than
the book value. It is anticipated that these properties will be disposed of in
2022 as part of a portfolio sale of remaining Greyhound properties.
The adjusting items in relation to finance cost adjustments – continuing
operations are as follows:
Total make-whole costs (bonds and facilities)
Costs of £50.0m comprise a charge of £30.4m for the early repayment of the
$275m US Private Placement (USPP) and a charge of £19.6m for the early
repayment of the £325m 2022 bond.
4 Reconciliation to non-GAAP measures and performance (continued)
Write-off of unamortised bridge, bond and facility costs
There was a charge of £8.6m for unamortised fees which had been capitalised
and were being amortised over the terms of the £325m 2022 bond, the $275m
USPP and various bank facilities, including the £800m RCF and bridge
facilities which were cancelled on completion of the sale of First Student and
First Transit.
Reconciliation of constant currency from continuing operations 52 weeks ending 26 March 2022 £m 52 weeks ending 27 March 2021
Reported £m Effect of foreign exchange £m Constant Currency £m % change
Revenue 4,591.1 4,318.8 (0.1) 4,318.7 6.3%
Adjusted operating profit 106.7 112.2 0.1 112.3 (5.0)%
Adjusted profit/(loss) before tax 24.8 (29.7) 0.2 (29.5) n/m
Adjusted EPS 1.6p (2.8)p – (2.8)p n/m
Net debt 619.0 2,625.8 43.6 2,669.4 76.8%
1 ‘Adjusted’ figures throughout
this document are before self-insurance reserve charges, strategy costs,
impairments, other intangible asset amortisation charges and any other charges
which are included in note 4.
2 Changes ‘in constant currency’
throughout this document are based on retranslating 2021 foreign currency
amounts at 2022 rates.
Group adjusted attributable EBITDA and operating profit
First Bus EBITDA comprises:
52 weeks to 52 weeks to 27 March 2021 £m
26 March 2022
£m
Pre-IFRS16 EBITDA 87.6 84.5
IFRS16 adjustments (1) 16.8 16.3
First Bus adjusted EBITDA per segmental results table above 104.4 100.8
First Rail EBITDA comprises:
Non-management fees based TOCs pre-IFRS16 EBITDA (9.7) (8.9)
Group’s share of management fee income available for dividends (net of tax and minority interest) 45.5 42.3
Tax 12.0 11.8
Minority interest 5.8 7.9
Depreciation relating to contracted TOCs 3.0 26.9
Pre-EMA/ERMA and other adjustments – 22.6
IFRS16 adjustments (1) 593.3 608.5
First Rail adjusted EBITDA per segmental results table above 649.9 711.1
Group items EBITDA comprises:
Pre-IFRS16 EBITDA (24.8) (30.8)
IFRS16 adjustments (1) 1.7 1.7
Group items adjusted EBITDA per segmental results table above (23.1) (29.1)
First Rail adjusted operating profit comprises:
Non-management fees based TOCs (9.7) (10.4)
Tax 12.0 11.8
Minority interest 5.8 7.9
Pre-EMA/ERMA and other adjustments – 22.6
Group’s share of management fee income available for dividends (net of tax and minority interest) 45.5 42.3
IFRS16 adjustments (1) 34.2 33.9
First Rail adjusted operating profit per segmental results table above 87.8 108.1
(1) IFRS 16 adjustments to EBITDA principally reflect the add back of
operating lease rental costs charged to the income statement before the
adoption of IFRS 16. IFRS 16 adjustments to operating profit reflect operating
lease rental costs less depreciation charges on Right of Use Assets.
5 Investment income and finance costs
2022 £m 2021 £m
Investment income
Bank interest receivable (1.5) (2.0)
Finance costs
Bonds 22.2 55.8
Bank borrowings 14.1 15.7
Total make-whole costs (bonds and facilities) 50.0 –
Write off of unamortised bridge, bond and facility costs 8.6 –
CCFF funding 0.7 2.0
Supplier financing 1.5 3.0
Senior unsecured loan notes 3.2 9.1
Loan notes - 0.1
Finance charges payable in respect of lease liabilities (1) 41.0 69.5
Finance charges payable in respect of asset backed financial liabilities (1) 2.3 3.6
Interest on long-term provisions 4.9 3.8
Interest on pensions 2.6 9.0
interest – other 2.4 0.4
Total finance costs (including discontinued operations) 153.5 172.0
Total finance costs 153.5 172.0
Investment income (1.5) (2.0)
Net finance cost before adjustments 152.0 170.0
Split:
Adjusted net finance costs 93.4 172.0
Other adjustments (note 4) 58.6 (2.0)
152.0 170.0
1 In the prior year these balances were combined and presented as
'finance charges payable In respect of leases', however following a Financial
Reporting Council enquiry these balances have now been reclassified – see
note 1 for further details.
Investment income of £0.4m and finance costs of £11.9m relate to
discontinued operations (note 14).
6 Tax on profit/(loss) on ordinary activities
2022 £m 2021 £m
Current tax 2.9 17.2
Adjustments with respect to prior years 1.2 5.5
Total current tax charge (including discontinued operations) 4.1 22.7
Origination and reversal of temporary differences 5.2 27.0
Adjustment in respect of prior years (10.7) (14.9)
Adjustments attributable to changes in tax rates and laws (1.4) –
Writing down of previously recognised deferred tax assets 40.6 –
Write back of previously unrecognised deferred tax assets (25.7) (10.1)
Total deferred tax charge (note 19) 8.0 2.0
Total tax charge (including discontinued operations) 12.1 24.7
Tax charge/(credit) attributable to:
(Loss/)profit from continuing operations (11.9) 6.3
Profit from discontinued operations 24.0 18.4
7 Earnings per share (EPS)
EPS is calculated by dividing the profit attributable to equity shareholders
of £636.4m (2021: profit £78.4m) by the weighted average number of ordinary
shares of 1,057.5m (2021: 1,203.6m). The number of ordinary shares used for
the basic and diluted calculations are shown in the table below.
The difference in the number of shares between the basic calculation and the
diluted calculation represents the weighted average number of potentially
dilutive ordinary share options.
2022 Number m 2021 Number m
Weighted average number of shares used in basic calculation 1,057.5 1,203.6
Executive share options 35.6 27.9
Weighted average number of shares used in the diluted calculation 1,093.1 1,231.5
The adjusted EPS is intended to highlight the recurring operating results of
the Group before amortisation charges and certain other adjustments as set out
in note 4. A reconciliation is set out below:
2022 2021 (restated)
£m EPS (pence) £m EPS (pence)
Basic profit/EPS 636.4 60.2 78.4 6.5
Amortisation charges (note 4) 0.4 – 4.1 0.3
Other adjustments (note 4) (579.7) (54.7) (69.7) (5.8)
Adjusting finance costs (note 4) 58.6 5.5 – –
NCI on SWR – – 6.6 0.6
Tax effect of above adjustments (21.8) (2.1) 30.6 2.5
Adjustments attributable to changes in tax rates and laws (1.4) (0.1) – –
Write down of previously recognised deferred tax assets 40.6 3.8 – –
Write back of previously unrecognised deferred tax assets (25.7) (2.4) (10.1) (0.8)
Adjusted profit and EPS attributable to the ordinary equity holders of the company 107.4 10.2 39.9 3.3
Adjusted profit from discontinued operations 90.9 8.6 73.1 6.1
Adjusted profit/(loss)/EPS from continuing operations 16.5 1.6 (33.2) (2.8)
2022 pence 2021 (restated) pence
Diluted EPS 60.2 6.4
Adjusted diluted EPS 9.8 3.2
The adjusted EPS on a continuing basis is set out below:
2022 2021 (restated)
£m EPS (pence) £m EPS (pence)
Basic profit/EPS (11.4) (1.1) 10.9 0.9
Amortisation charges (note 4) – – 0.2 –
Other adjustments (note 4) (16.1) (1.4) (59.0) (5.0)
Adjusting finance costs (note 4) 58.6 5.5 – –
NCI on SWR – – 6.6 0.6
Tax effect of above adjustments (7.1) (0.7) 18.2 1.5
Adjustments attributable to changes in tax rates and laws (1.4) (0.1) – –
Write down of previously recognised deferred tax assets – – – –
Write back of previously unrecognised deferred tax assets (6.1) (0.6) (10.1) (0.8)
Adjusted profit/(loss)/EPS from continuing operations 16.5 1.6 (33.2) (2.8)
2022 pence 2021 (restated) Pence
Diluted EPS (1.1) 0.9
Adjusted diluted EPS 1.5 (2.8)
The results for the 52 weeks to 27 March 2021 have been restated since they
have been split into the results for the continuing operations and the results
for the discontinued operations. Discontinued operations now includes
Greyhound entities which were sold in the year.
8 Goodwill
2022 £m
Cost
At 28 March 2021 347.7
Additions (1) 9.7
Transfers to held for sale – discontinued operations (264.6)
Foreign exchange movements 0.7
At 26 March 2022 93.5
Accumulated impairment losses
At 28 March 2021 263.8
Transfers to held for sale – discontinued operations (264.6)
Foreign exchange movements 0.8
At 26 March 2022 –
Carrying amount
At 26 March 2022 93.5
At 27 March 2021 83.9
1 Additions of £9.7m relate to continuing operations. Additions
also include £1.3m relating to an acquisition by First Student which was
subsequently disposed of as part of the First Student disposal in the year
therefore this is not included in the above note as First Student was
transferred to discontinued operations in the prior year.
Goodwill transferred to held for sale – discontinued operations on 25
September 2021 in relation to Greyhound is shown in the table above.
Goodwill in the above table relates to First Bus and Hull Trains.
9 Other intangible assets
Customer contracts £m Greyhound brand and trade name £m Software £m Total £m
Cost
At 28 March 2020 501.8 74.2 87.9 663.9
Acquisitions 0.9 – – 0.9
Additions – – 4.1 4.1
Transfers to held for sale - discontinued operations (460.6) – (21.2) (481.8)
Disposals – – (3.8) (3.8)
Foreign exchange movements (42.1) (5.8) (6.9) (54.8)
At 27 March 2021 – 68.4 60.1 128.5
Acquisitions – – 0.2 0.2
Additions – – 9.7 9.7
Transfers to held for sale – discontinued operations – (57.7) (39.4) (97.1)
Disposals – (14.0) (0.3) (14.3)
Foreign exchange movements – 3.3 1.7 5.0
At 26 March 2022 – – 32.0 32.0
Accumulated amortisation and impairment
At 28 March 2020 481.3 64.7 66.0 612.0
Charge for year 2.9 1.2 11.0 15.1
Transfers to held for sale – discontinued operations (443.7) – (16.3) (460.0)
Disposals – – (3.3) (3.3)
Foreign exchange movements (40.5) (5.1) (5.9) (51.5)
At 27 March 2021 – 60.8 51.5 112.3
Charge for year – 0.3 6.1 6.4
Impairment – 1.6 – 1.6
Impairment reversal – (3.4) (0.8) (4.2)
Transfers to held for sale – discontinued operations – (48.2) (38.7) (86.9)
Disposals – (14.0) (0.3) (14.3)
Foreign exchange movements – 2.9 1.8 4.7
At 26 March 2022 – – 19.6 19.6
Carrying amount
At 26 March 2022 – – 12.4 12.4
At 27 March 2021 – 7.6 8.6 16.2
10 Property, plant and equipment
Owned assets
Land and buildings £m Passenger carrying vehicle fleet £m Other plant and equipment £m Total £m
Cost
At 28 March 2020 480.2 3,440.1 876.0 4,796.3
Acquisitions – 0.6 – 0.6
Additions 4.9 197.4 135.5 337.8
Transfers to right of use assets (1) – (89.2) – (89.2)
Transfers from right of use assets (1) – 91.7 – 91.7
Disposals (37.0) (119.6) (93.0) (249.6)
Reclassified as assets held for sale (14.6) (110.4) – (125.0)
Transferred to held for sale - discontinued operations (134.2) (2,150.6) (251.5) (2,536.3)
Foreign exchange movements (23.9) (233.1) (32.4) (289.4)
At 27 March 2021 275.4 1,026.9 634.6 1,936.9
At 28 March 2021 275.4 1,026.9 634.6 1,936.9
Acquisitions (3) – – – –
Additions 3.7 92.6 51.7 148.0
Transfers from right of use assets – 50.8 – 50.8
Disposals (5.4) (42.2) (6.8) (54.4)
Reclassified as assets held for sale (47.6) (10.3) – (57.9)
Transfers 10.3 – 16.8 27.1
Transferred to held for sale – discontinued operations (36.7) (326.9) (36.6) (400.2)
Foreign exchange movements 3.9 8.2 3.1 15.2
At 26 March 2022 203.6 799.1 662.8 1,665.5
Accumulated depreciation and impairment
At 28 March 2020 119.9 1 878.6 678.4 2,676.9
Charge for year 13.5 226.6 51.7 291.8
Transfers to right of use assets (1) – (11.5) – (11.5)
Transfers from right of use assets (1) – 44.3 – 44.3
Disposals (8.9) (103.7) (86.9) (199.5)
Impairment (2) 16.6 – – 16.6
Reclassified as assets held for sale (2.7) (106.5) – (109.2)
Transferred to held for sale – discontinued operations (52.6) (1,076.6) (229.0) (1,358.2)
Foreign exchange movements (8.3) (131.0) (24.3) (163.6)
At 27 March 2021 77.5 720.2 389.9 1,187.6
At 28 March 2021 77.5 720.2 389.9 1,187.6
Charge for year 6.0 44.2 106.6 156.8
Transfers from right of use assets – 6.3 – 6.3
Disposals (2.5) (42.5) (4.0) (49.0)
Impairment (2) 7.3 (34.8) (2.6) (30.1)
Reclassified as assets held for sale (9.5) (10.3) – (19.8)
Transfers 2.6 – 16.5 19.1
Transferred to held for sale – discontinued operations (5.8) (209.6) (60.3) (275.7)
Foreign exchange movements 1.3 10.7 1.9 13.9
At 26 March 2022 76.9 484.2 448.0 1,009.1
Carrying amount
At 26 March 2022 126.7 314.9 214.8 656.4
At 27 March 2021 197.9 306.7 244.7 749.3
1 Transfers to right of use assets represents purchased property,
plant and equipment that was transitioned to lease shortly after purchase.
Transfers from right of use assets represents lease buyouts.
2 The impairment reversal of £37.4m relates to Greyhound (2021:
charge of £16.6m in 2021 relates to properties associated with First Bus and
Group). The impairment charge of £7.3m relates to retained Greyhound
properties, these have subsequently been transferred to assets held for sale.
3 Acquisitions of £nil relate to continuing operations.
Acquisitions also include £1.4m relating to an acquisition by First Student
which was subsequently disposed of as part of the First Student disposal in
the year therefore this is not included in the above note as First Student was
transferred to discontinued operations in the prior year.
10 Property, plant and equipment (continued)
Right of use assets
Rolling stock £m Land and buildings £m Passenger carrying vehicle fleet £m Other plant and equipment £m Total £m
Cost
At 28 March 2020 2,541.4 261.3 332.8 6.8 3,142.3
Additions 102.9 56.6 13.7 0.5 173.7
Transfer to owned assets (1) – – (91.7) – (91.7)
Transfer from owned assets (1) – – 89.2 – 89.2
Disposals (46.8) (4.3) – – (51.1)
Transferred to held for sale – discontinued operations – (177.0) (174.3) (0.4) (351.7)
Foreign exchange movements – (20.9) (24.7) – (45.6)
At 27 March 2021 2,597.5 115.7 145.0 6.9 2,865.1
At 28 March 2021 2,597.5 115.7 145.0 6.9 2,865.1
Additions 93.1 3.2 9.4 1.0 106.7
Transfer to owned assets – – (50.8) – (50.8)
Disposals (105.0) (3.7) (1.9) – (110.6)
Transferred to held for sale – discontinued operations – (62.2) (42.2) (0.4) (104.8)
Foreign exchange movements – 2.9 0.7 – 3.6
At 26 March 2022 2,585.6 55.9 60.2 7.5 2,709.2
Accumulated depreciation and impairment
At 28 March 2020 652.3 94.0 138.4 2.5 887.2
Transfer to owned assets (1) – – (44.3) – (44.3)
Transfer from owned assets (1) – – 11.5 – 11.5
Charge for period 571.2 52.7 44.7 1.8 670.4
Impairment (2) (146.5) 3.5 – – (143.0)
Disposals (17.4) (1.5) – – (18.9)
Transferred to held for sale – discontinued operations – (79.0) (93.2) (0.4) (172.6)
Foreign exchange movements – (8.3) (11.3) – (19.6)
At 27 March 2021 1,059.6 61.4 45.8 3.9 1,170.7
At 28 March 2021 1,059.6 61.4 45.8 3.9 1,170.7
Transfer to owned assets – – (6.3) – (6.3)
Charge for period 553.2 10.9 17.0 1.6 582.7
Impairment (2) – (10.4) (3.4) – (13.8)
Disposals (3.1) (1.6) (1.0) – (5.7)
Transferred to held for sale – discontinued operations – (39.9) (17.3) (0.4) (57.6)
Foreign exchange movements – 2.1 0.8 – 2.9
At 26 March 2022 1,609.7 22.5 35.6 5.1 1,672.9
Carrying amount
At 26 March 2022 975.9 33.4 24.6 2.4 1,036.3
At 27 March 2021 1,537.8 54.3 99.2 3.0 1,694.3
1 Transfers from owned assets represents purchased property, plant
and equipment that was transitioned to lease shortly after purchase. Transfers
to owned assets represents lease buyouts.
2 The impairment reversal of £13.8m relates to Greyhound (2021:
charge of £3.5m relates to First Student, reversal of £146.5m relates to SWR
and TPE).
The discounted lease liability relating to the right of use assets included
above are shown in note 16.
Owned assets and right of use assets
Rolling stock £m Land and buildings £m Passenger carrying vehicle fleet £m Other plant and equipment £m Total £m
Carrying amount
At 26 March 2022 975.9 160.1 339.5 217.2 1,692.7
At 27 March 2021 1,537.9 252.2 405.9 247.7 2,443.7
The maturity analysis of lease liabilities is presented in note 16.
Amounts recognised in income statement (including discontinued operations) 2022 £m 2021 £m
Depreciation expense on right of use assets 582.7 670.4
Interest expense on lease liabilities 41.0 73.1
Expense relating to short-term leases – 4.7
Expense relating to leases of low value assets 3.4 3.4
627.1 751.6
11 Inventories
2022 £m 2021 £m
Spare parts and consumables from continuing operations 28.9 29.4
On 26 March 2022 inventories of £nil (2021: £19.5m) have been transferred to
held for sale – discontinued operations, see note 14.
12 Trade and other receivables
Amounts due after more than one year (from continuing operations) 2022 £m 2021 £m
Contingent consideration receivable 106.1 –
106.1 –
Amounts due within one year (from continuing operations) 2022 £m 2021 £m
Trade receivables 292.1 223.5
Loss allowance (15.2) (7.3)
Trade receivables net 276.9 216.2
Other receivables 194.7 162.4
Amounts recoverable on contracts 3.1 23.3
Prepayments 69.4 75.6
Accrued income 138.2 199.2
682.3 676.7
On 26 March 2022 Trade and other receivables of £nil (2021: £548.4m) have
been transferred to held for sale – discontinued operations, see note 14.
13 Trade and other payables
Amounts falling due within one year (from continuing operations) 2022 £m 2021 £m
Trade payables 253.3 182.3
Other payables 165.9 239.5
Accruals 703.2 1,047.0
Deferred income 109.8 112.8
Season ticket deferred income 12.9 6.0
1,245.1 1,587.6
On 26 March 2022 Trade and other payables of £nil (2021: £325.4m) have been
transferred to held for sale – discontinued operations, see note 14.
14 Discontinued operations
First Student and First Transit
The sale of First Student and First Transit was approved by a shareholder
majority on 27th May 2021 and was reported as a discontinued operation in the
financial statements for the 52 weeks ended 27 March 2021. The sale completed
on 21 July 2021. Proceeds net of direct transaction costs/fees were £2,323.3m
excluding earn out. First Student and First Transit are therefore reported in
the 52 weeks ended 26 March 2022 as discontinued operations. Financial
information relating to the discontinued operation for the period to the date
of the disposal (21 July 2021) is set out below in (a).
Greyhound
The disposal of Greyhound Lines, Inc to a wholly owned subsidiary of
FlixMobility GmbH was announced and completed on 21 October 2021. Greyhound US
is reported as a discontinued operation for the 52 weeks to 26 March 2022. The
properties relating to the retained Greyhound business have been classified as
held for sale and are therefore treated as discontinued as it is anticipated
that these properties will be disposed of in 2022 as part of a single plan to
sell the remaining portfolio of Greyhound properties.
(a) Financial performance and cash flow information
The financial performance and cash flow information presented are for the 52
weeks ending 26 March 2022, and include the results of First Student and First
Transit to the period before disposal on 21 July 2021, and the results of
Greyhound to the period before disposal on 21 October 2021.
Discontinued Operations 2022 £m 2021 £m
Revenue 996.9 2,526.0
Operating costs (313.6) (2,411.2)
Operating profit 683.3 114.8
Investment income 0.4 0.2
Finance costs (11.9) (28.3)
Profit before tax 671.8 86.7
Tax (24.0) (18.4)
Profit for the year after tax 647.8 68.3
Attributable to:
Equity holders of the parent 647.8 67.5
Non-controlling interests – 0.8
647.8 68.3
EPS 2022 pence 2021 pence
Basic EPS 61.3 5.6
Diluted EPS 61.3 5.5
Cash flow 2022 £m 2021 £m
Net cash inflow from operating activities 233.4 256.2
Net cash outflow from investing activities (286.6) (126.7)
Net cash outflow from financing activities (20.3) (124.6)
Net (decrease)/increase in cash generated (73.5) 4.9
Other comprehensive income
52 weeks to 26 March 2022 £m 52 weeks to 27 March 2021 £m
Actuarial (losses)/gains on defined benefit pension schemes 12.1 51.4
Deferred tax on actuarial gains/(losses) on defined benefit pension schemes – (4.6)
Hedging instrument movements 2.7 7.6
Deferred tax on hedging instrument movements (0.7) (2.0)
Exchange differences on translation of discontinued operations (5.6) (112.2)
T otal 8.5 (59.8)
14 Discontinued operations (continued)
(b) Details of the sale of First Student and First Transit
52 weeks to 26 March 2022 £m 52 weeks to 27 March 2021 £m
Consideration received or receivable:
Cash 2,377.3 –
Direct transaction costs/fees (54.0) –
Fair value of contingent consideration 101.8 –
Total net disposal consideration 2,425.1 –
Carrying amount of net assets sold (2,374.6) –
Gain on sale before tax and reclassification of foreign currency translation reserve 50.5 –
Reclassification of foreign currency translation reserve 450.6 –
Gain on sale of the division before tax 501.1 –
Tax on gain – –
Gain on sale of the divisions after tax 501.1 –
As part of the disposal of First Transit, FirstGroup are entitled to an
‘earn out’ consideration of up to $290m (c. £220m). The earn out is for a
period of 3 years from 21 July 2021 and is calculated as a percentage of the
Realised Equity Value.
The earn out was fair valued at 26 March 2022 using an Income Approach based
on discounted cash flows and a Market Approach using earnings multiples and
assumes EQT does not dispose of the business by the third anniversary (21 July
2024). Fair value was $140m (c. £106m) at 26 March 2022.
The carrying amounts of assets and liabilities as at the date of sale (21 July
2021) were:
21 July 2021 £m
Non-current assets
Goodwill 1,448.0
Other intangible assets 23.0
Property, plant and equipment 1,464.3
Investments 26.4
2,961.7
Current assets
Inventories 21.8
Trade and other receivables 411.9
Assets held for sale 0.5
Cash and cash equivalents 83.9
518.1
Total assets 3,479.8
Current liabilities
Trade and other payables 361.7
Tax liabilities – Current tax liabilities 2.4
Borrowings 65.1
Provisions 131.2
560.4
Net current liabilities (42.3)
Non-current liabilities
Borrowings 194.9
Retirement benefit liabilities 24.4
Deferred tax liabilities 71.3
Provisions 254.2
544.8
Total liabilities of discontinued operations 1,105.2
Net assets 2,374.6
(c) Details of the sale of Greyhound
52 weeks to 26 March 2022 £m 52 weeks to 27 March 2021 £m
Consideration received or receivable:
Cash 101.4 –
Direct transaction costs/fees (17.0) –
Fair value of contingent consideration 23.3 –
Total net disposal consideration 107.7 –
Carrying amount of net assets sold (91.5) –
Gain on sale before tax and reclassification of foreign currency translation reserve 16.2 –
Reclassification of foreign currency translation reserve 92.8 –
Gain on sale of the division before tax 109.0 –
Tax on gain – –
Gain on sale of the division after tax 109.0 –
14 Discontinued operations (continued)
The carrying amounts of assets and liabilities as at the date of sale (21
October 2021) were:
21 October 2021 £m
Non-current assets
Other intangible assets 10.2
Property, plant and equipment 171.7
181.9
Current assets
Inventories 4.7
Trade and other receivables 39.8
Investments 2.0
Current tax assets 0.3
Cash and cash equivalents 74.8
121.6
Total assets 303.5
Current liabilities
Trade and other payables 126.4
Tax liabilities – Other tax and social security 1.0
Borrowings 14.8
Provisions 8.6
150.8
Net current liabilities (29.2)
Non-current liabilities
Finance lease liabilities 43.3
Retirement benefit liabilities 1.9
Provisions 16.0
61.2
Total liabilities of discontinued operations 212.0
Net assets 91.5
(d) Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in
relation to the discontinued operations as at 26 March 2022 in relation to
Greyhound and as at 27 March 2021 in relation to First Student and First
Transit.
2022 £m 2021 £m
Non-current assets
Goodwill – 1,442.0
Other intangible assets – 21.8
Property, plant and equipment – 1,357.2
Derivative financial instruments – 0.5
Investments – 30.9
– 2,852.4
Current assets
Inventories – 19.5
Trade and other receivables – 548.4
Current tax assets – 0.4
Derivative financial instruments – 0.1
Assets held for sale 38.5 0.4
Cash and cash equivalents – 58.3
38.5 627.1
Total assets of discontinued operations 38.5 3,479.5
Current liabilities
Trade and other payables – 325.4
Tax liabilities – current tax liabilities – 3.5
Derivative financial instruments – 0.9
Borrowings – 68.4
Provisions – 138.6
– 536.8
Net current assets 38.5 90.3
Non-current liabilities
Borrowings – 279.3
Derivative financial instruments – 0.2
Retirement benefit liabilities – 24.7
Deferred tax liabilities – 33.6
Provisions – 262.0
– 599.8
Total liabilities of discontinued operations – 1,136.6
Net assets of discontinued operations 38.5 2,342.9
15 Borrowings
2022 £m 2021 £m
On demand or within 1 year
Lease liabilities (note 16) (3,4) 573.4 570.7
Asset backed financial liabilities (note 16) (4) 9.0 10.7
Bank overdraft 87.5 53.8
CCFF – 298.2
Bond 8.75% (repayable 2021) (1) – 380.1
Bond 5.25% (repayable 2022) (2) – 5.6
Bond 6.875% (repayable 2024) (2) 7.1 7.1
Total current liabilities from continuing operations 677.0 1,326.2
Amounts relating to held for sale – discontinued operations – 68.4
Total current liabilities (including discontinued operations) 677.0 1,394.6
Within 1-2 years
Syndicated loans – 116.5
Lease liabilities (note 16) (3,4) 167.8 561.7
Asset backed financial liabilities (note 16) (4) 15.7 11.1
Loan notes (note 17) 0.6 0.7
Bond 5.25% (repayable 2022) – 323.4
184.1 1,013.4
Within 2-5 years
Syndicated loan facilities – 449.8
Lease liabilities (note 16) (3,4) 294.4 541.5
Asset backed financial liabilities (note 16) (4) 10.5 35.5
Bond 6.875% (repayable 2024) 199.9 199.8
Senior unsecured loan notes – 72.5
504.8 1,299.1
Over 5 years
Lease liabilities (note 16) (3,4) 47.6 48.8
Asset backed financial liabilities (note 16) (4) 0.3 4.4
Senior unsecured loan notes – 126.3
47.9 179.5
Total non-current liabilities at amortised cost from continuing operations 736.8 2,492.0
Amounts related to held for sale – discontinued operations – 279.3
Total non-current liabilities (including discontinued operations) 736.8 2,771.3
1 Includes accrued interest.
2 Includes accrued interest only.
3 The right of use assets relating to lease liabilities are shown
in note 10.
4 The maturity analysis of lease liabilities and asset backed
financial liabilities is presented in note 16. In the prior year these
balances were combined and presented as 'leases', however they have now been
reclassified. See note 1 for further details.
16 Lease liabilities and asset backed financial liabilities
The Group had the following lease liabilities and financial liabilities at the
balance sheet dates excluding liabilities relating to the discontinued
operations:
Lease liabilities (1) Asset backed financial liabilities (1)
Maturity analysis: 2022 £m 2021 £m 2022 £m 2021 £m
Due in less than one year 593.0 621.3 9.3 11.0
Due in more than one year but not more than two years 179.4 581.1 16.6 11.8
Due in more than two years but not more than five years 304.4 566.3 11.9 40.3
Due in more than five years 59.8 66.4 0.5 5.3
1,136.6 1,835.1 38.3 68.4
Less future financing charges (53.4) (112.6) (2.8) (6.5)
1,083.2 1,722.5 35.5 61.9
1 In the prior year these balances were combined and presented as
'lease liabilities', however they have now been reclassified. See note 1 for
further details.
On 26 March 2022 lease liabilities of £nil and asset backed financial
liabilities of £nil (2021: lease liabilities of £126.5m and asset backed
financial backed of £61.0m) have been transferred to held for sale -
discontinued operations, see note 14.
Lease liabilities have a fair value of £1,083.2m and asset backed financial
liabilities have a fair value of £36.4m (2021: lease liabilities £1,722.6m,
asset backed financial liabilities £64.4m).
The total cash outflow for the lease liabilities and asset backed financial
liabilities recorded on the balance sheet amounted to £600.4m and £9.4m
respectively (2021: £685.0m and £25.1m), this includes cash outflow relating
to held for sale - discontinued operations amount to £nil (2021: £124.6m).
The right of use assets related to the lease liabilities is presented in note
10.
17 Loan notes
The Group had the following loan notes issued as at the balance sheet dates
relating to continuing operations:
2022 £m 2021 £m
Due in less than one year – –
Due in more than one year but not more than two years 0.6 0.7
0.6 0.7
18 Financial instruments
Non-derivative financial instruments
2022 £m 2021 £m
Total non-derivatives
Total non-current assets 117.0 –
Total assets from continuing operations 117.0 –
Amounts relating to held for sale – discontinued operations – –
Total assets 117.0 –
Derivative financial instruments
2022 £m 2021 £m
Total derivatives
Total non-current assets 4.2 1.2
Total current assets 26.2 14.9
Total assets from continuing operations 30.4 16.1
Amounts relating to held for sale – discontinued operations – 0.6
Total assets 30.4 16.7
Total current liabilities – 11.8
Total non-current liabilities – 1.2
Total liabilities from continuing operations – 13.0
Amounts relating to held for sale – discontinued operations – 1.1
Total liabilities – 14.1
Derivatives designated and effective as hedging instruments carried at fair value
Non-current assets
Fuel derivatives (cash flow hedge) 4.0 1.0
Cross currency swaps (net investment hedge) – 0.3
Currency forwards (cash flow hedge) 0.2 –
4.2 1.3
Current assets
Fuel derivatives (cash flow hedge) 25.6 1.9
Cross currency swaps (net investment hedge) – 13.5
Currency forwards (cash flow hedge) 0.6 –
26.2 15.4
Current liabilities
Fuel derivatives (cash flow hedge) – 4.8
Currency forwards (cash flow hedge) – 1.1
Currency forwards (net investment hedge) – 6.4
– 12.3
Non-current liabilities
Currency forwards (cash flow hedge) – 0.6
Fuel derivatives (cash flow hedge) – 0.8
– 1.4
Derivatives designated classified as held for trading
Current liability
Fuel derivatives – 0.4
– 0.4
19 Deferred tax
The major deferred tax liabilities/(assets) recognised by the Group and
movements thereon during the current and prior reporting periods are
as follows:
Accelerated tax depreciation £m Retirement benefit schemes £m Other temporary differences £m Tax loses £m Total £m
At 28 March 2020 207.3 (30.6) 91.7 (263.2) 5.2
Charge/(credit) to income statement 6.8 6.4 (26.8) 15.6 2.0
Charge/(credit) to other comprehensive income and equity – (15.5) 10.0 – (5.5)
Transferred to held for sale – discontinued operations (185.8) 6.3 (77.4) 223.3 (33.6)
Foreign exchange and other movements (17.6) 1.0 (10.8) 24.3 (3.1)
At 27 March 2021 10.7 (32.4) (13.3) – (35.0)
Charge/(credit) to income statement 1.2 39.0 (39.7) 7.5 8.0
Charge to other comprehensive income and equity – 22.1 5.8 – 27.9
Transferred to held for sale – discontinued operations (16.6) 20.6 1.3 (43.0) (37.7)
Foreign exchange and other movements (1.4) (0.7) 1.0 1.8 0.7
At 26 March 2022 (6.1) 48.6 (44.9) (33.7) (36.1)
Certain deferred tax assets and liabilities have been offset. The following is
the analysis of the deferred tax balances for financial reporting purposes:
2022 £m 2021 £m
Deferred tax assets (36.1) (35.0)
Deferred tax liabilities – 33.6
(36.1) (1.4)
19 Deferred tax (continued)
With respect to the total net deferred tax asset of £36.1m, UK net deferred
tax assets of £14.4m have been recognised as the Group forecasts sufficient
taxable profits in future periods and a deferred tax asset of £21.7m relating
to the US is recognised because it is probable that book gains will arise on
the Greyhound property portfolio.
No deferred tax has been recognised on deductible temporary differences of
£105.1m (2021: £232.2m) and tax losses of £95.6m (2021: £430.4m).
20 Provisions
2022 £m 2021 £m
Insurance claims 96.2 111.9
Legal and other 23.3 22.8
Pensions 1.2 0.8
120.7 135.5
On 26 March 2022 provisions of £nil (2021: £400.6m) have been transferred to
discontinued operations, see note 14.
Insurance claims £m Legal and other £m Pensions £m Total £m
At 27 March 2021 172.2 36.5 1.2 209.9
Charged to the income statement 33.2 55.3 0.1 88.6
Utilised in the year (43.0) (14.8) – (57.8)
Transferred from accruals – 9.6 – 9.6
Notional interest 3.0 – – 3.0
Transferred to held for sale – discontinued operations (22.6) (2.0) – (24.6)
Foreign exchange movements 5.2 1.4 – 6.6
At 26 March 2022 148.0 86.0 1.3 235.3
Current liabilities 51.8 62.7 0.1 114.6
Non-current liabilities 96.2 23.3 1.2 120.7
At 26 March 2022 148.0 86.0 1.3 235.3
Current liabilities 60.3 13.7 0.4 74.4
Non-current liabilities 111.9 22.8 0.8 135.5
At 27 March 2021 172.2 36.5 1.2 209.9
The insurance claims provision arises from estimated exposures for incidents
occurring prior to the balance sheet date. It is anticipated that the majority
of such claims will be settled within the next five years although certain
liabilities in respect of lifetime obligations of £8.9m (2021: £10.3m) can
extend for up to 30 years. The utilisation of £43.0m (2021: £186.0m)
represents payments made against the current liability of the preceding year
as well as the settlement of certain large aged claims.
The insurance claims provisions, of which £96.0m relates to legacy Greyhound
claims, includes £88.5m (2021: £24.7m) which is recoverable from insurance
companies and a receivable is included within other receivables in note 12.
Legal and other provisions relate to estimated exposures for cases filed or
thought highly likely to be filed for incidents that occurred prior to the
balance sheet date. It is anticipated that most of these items will be settled
within ten years. Also included are provisions in respect of costs anticipated
on the exit of surplus properties which are expected to be settled over the
remaining terms of the respective leases and dilapidation, other provisions in
respect of contractual obligations under rail franchises and restructuring
costs. The dilapidation provisions are expected to be settled at the end of
the respective franchise.
The pensions provision relates to unfunded obligations that arose on the
acquisition of certain First Bus companies. It is anticipated that this will
be utilised over approximately five years.
21 Called up share capital
Number of shares million £m
Allotted, called up and fully paid (ordinary shares of 5p each)
Balance as at 28 March 2021 1,221.8 61.1
Shares bought back and cancelled (476.2) (23.8)
SAYE/BAYE exercises 4.6 0.2
Balance as at 26 March 2022 (ordinary shares of 5p each) 750.2 37.5
The Company has one class of ordinary shares which carries no right to fixed
income.
Following the completion of the sale of First Student and First Transit, the
Company announced and completed a tender offer to purchase 476.2m ordinary
shares at a price of 105 pence per share, for a total cost of £506.0m,
including transaction costs of £6.0m. The shares acquired under the tender
offer were immediately cancelled.
During the year 4.6m shares were issued to satisfy principally SAYE and BAYE
exercises.
22 Net cash from operating activities
2022 £m 2021 £m
Operating profit from:
Continuing operations 122.8 224.3
Discontinued operations 683.3 61.5
Total operations 806.1 285.8
Adjustments for:
Depreciation charges 746.4 962.3
Capital grant amortisation (115.8) (13.3)
Software amortisation charges 4.7 11.2
Other intangible asset amortisation charges 0.4 4.1
Gain on disposal of subsidiaries and businesses (66.7) –
Recycling of translation reserve (543.4) –
(Reversal of impairment)/impairment charges (48.1) 16.6
Share-based payments 5.4 11.9
Profit on disposal of property, plant and equipment (22.1) (73.0)
Operating cash flows before working capital and pensions 766.9 1,205.6
(Increase)/decrease in inventories (6.4) 12.0
Decrease/(increase) in receivables 95.5 (5.9)
(Decrease)/increase in payables due within one year (52.4) 197.0
Increase in financial assets (117.0) –
Increase in contingent consideration receivable (106.1) –
Increase/(decrease) in provisions due within one year 36.5 (1.7)
(Decrease)/increase in provisions due over one year (13.2) 10.9
Defined benefit pension payments in excess of income statement charge (340.4) (59.2)
Cash generated by operations 263.4 1,358.7
Tax paid (21.4) (4.5)
Interest paid¹ (176.6) (149.8)
Net cash from operating activities 65.4 1,204.4
1 Interest paid includes £41.0m relating to lease liabilities
(2021: £69.5m)
2 Net cash from operating activities is stated after an outflow of
£9.1m (2021: outflow of £17.2m) in relation to financial derivative
settlements.
Responsibility Statement of the Directors on the Annual Report
The responsibility statement below has been prepared in connection with the
Group’s full annual report for the 52 weeks ended 26 March 2022. Certain
parts thereof are not included within the announcement.
We confirm to the best of our knowledge:
• The financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole
• The Management Report, which is incorporated into the Directors’
Report, includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face.
• The Directors consider that the annual report and financial
statements, taken as a whole, are fair, balanced and understandable and
provide information necessary for the shareholders to assess the Company’s
and the Group’s position and performance, business model and strategy.
This responsibility statement was approved by the Board of Directors and is
signed on its behalf by:
Ryan Mangold
Chief Financial Officer
14 June 2022
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