REG-FirstGroup Plc: Half-year Report
14/11/2024 07:30
FIRSTGROUP PLC
HALF-YEARLY REPORT FOR THE 26 WEEKS TO 28 SEPTEMBER 2024
A robust operational and financial performance in H1 2025 leaves the Group
slightly ahead of full year expectations, with the Board announcing an
additional buyback programme.
Highlights
• Adjusted revenue growth to £649.6m (H1 2024 £634.8m) reflecting strong underlying performance in First Bus and good demand in First Rail open access
• Group adjusted operating profit £100.8m; H1 2024 was positively affected by an extra week of trading and a c.£13m uplift from higher than accrued final FY 2023 variable fee awards in the First Rail DfT Train Operating Companies (‘DfT TOCs’)
• Adjusted EPS of 8.5p for continuing operations (H1 2024: 8.1p)
• Interim dividend of 1.7p per share declared (H1 2024: 1.5p per share)
• Additional on market share buyback programme of £50m announced
• Strong balance sheet maintained; adjusted net debt at period end of £0.2m
• Recent strategic acquisitions in both divisions that will grow First Bus Adjacent Services and increase First Rail’s open access capacity
H1 2025 (£m) H1 2024 (£m)
Cont. Disc. Total Cont. Disc. Total
Adjusted revenue 1 649.6 - 649.6 634.8 - 634.8
Adjusted operating profit/(loss) 2 100.8 - 100.8 100.6 (2.2) 98.4
Adjusted operating profit margin 15.5% 15.5% 15.8% 15.5%
Adjusted profit/(loss) before tax 2 70.8 (0.1) 70.7 73.5 (2.2) 71.3
Adjusted EPS 3,4 8.5p - 8.5p 8.1p (0.3)p 7.8p
Dividend per share 1.7p 1.5p
Adjusted net debt/(cash) 5 0.2 (77.1)
H1 2025 (£m) H1 2024 (£m)
Statutory Cont. Disc. Total Cont. Disc. Total
Revenue 2,344.1 - 2,344.1 2,207.0 - 2,207.0
Operating profit/(loss) 100.3 5.9 106.2 (41.4) 0.1 (41.3)
Profit/(loss) before tax 6 70.3 5.8 76.1 (68.5) 0.1 (68.4)
EPS 4 9.2p (7.9)p
Net debt 977.1 1,144.6
- Bonds, bank and other debt net of (cash) (274.7) (384.4)
- IFRS 16 lease liabilities 1,251.8 1,529.0
’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.
Key developments
First Bus:
• Underlying 7 passenger volumes increased 4% vs. H1 2024, with operational improvements driving growth in both volumes and profitability
• Total of 83m service miles operated in H1 2025 (H1 2024: 80m on an underlying basis)
• Total revenue increased to £513.7m (H1 2024: £504.9m) despite a c.£12.4m reduction in government funding; underlying passenger revenue growth of 10%
• Adjacent Services revenue increased to £125.7m from £116.2m in H1 2024 due to contract wins and extensions and contribution of Ensignbus and York Pullman
• Adjusted operating margin increased to 8.0% (H1 2024: 7.1%); on track for 10% in H2 2025
• Further progress in electrification of fleet and infrastructure:
- c.15% of the fleet is now zero emission, with three depots in England now fully electrified and a further five across the UK substantially electrified
- First Bus placed the UK’s largest single repower order with Wrightbus for 32 diesel to electric bus conversions, scheduled for delivery in FY 2025
• Post period end acquisitions of Anderson Travel and Lakeside Group in England and new contract with Flixbus representing additional combined annual revenues of c.£25m
First Rail:
• 132.3m passenger journeys in H1 2025 (H1 2024: 123.4m); DfT TOCs: 130.9m and open access 1.4m
• DfT TOCs financial performance in line with expectations; H1 2024 was positively affected by higher than accrued final variable fee payments for FY 2023. Focus remains on operational delivery for passengers across all our services
• Open access operations revenue growth of £5.6m (12%) in line with expectations
• First London Cableway successfully took over the operation of the London Cable Car on behalf of TfL in June (c.£60m revenue anticipated over the eight-year contract)
• Acquisition of track access rights for new rail open access service between London and Stirling
• Applications for the extension of Hull Trains to Sheffield and Lumo to Glasgow have been submitted, as well as for a new service to run between Rochdale and London; consultations are progressing, supported by detailed performance and business case analysis
Corporate:
• Appointment of Lena Wilson as Board Chair effective from 1 February 2025
• FirstGroup upgraded to MSCI’s highest possible ESG ranking of AAA in July 2024
• Remainder of the Group’s September 2024 6.875% bonds repurchased
• Legacy US Greyhound pension obligations now fully discharged; one-off net settlement gain of £5.5m after related costs recognised in H1 2025
Outlook
• Current trading and the Group’s outlook for FY 2025 is slightly ahead of our expectations as set out at the full year results in June:
- First Bus: we expect to make further progress in H2 2025, reaching a 10% adjusted operating margin for the half, driven by operational improvements, efficiency initiatives and the newer fleet
- First Rail: the division’s financial performance in H2 2025 is anticipated to be slightly ahead of our prior expectations, reflecting growth in open access and a normal level of variable fee awards in the DfT TOCs (approximately two thirds of the maximum available)
- Marginal adjusted net debt position expected at the end of FY 2025, assuming net cash capex of £125m in First Bus and after the deployment of announced growth capital and progression of the £50m buyback programme
• The Group expects to maintain its adjusted EPS in FY 2026 as we grow earnings in First Bus and open access rail
Commenting, Chief Executive Officer Graham Sutherland said:
“We have reported a robust set of results for the first half of our 2025
financial year and are on course to make further progress in the second half,
reinforcing our strong track record for delivery. As a major bus and rail
operator in the UK we have a critical role to play in supporting the
country’s wider economic, social and environmental goals. We will continue
to take a proactive approach, demonstrating our strengths as an experienced,
trusted partner in public transport.”
Results presentation and webcast
A presentation and webcast for investors and analysts will be held at 09:00
(GMT) today in London. To register to join in person or to request the webcast
details, please email corporate.comms@firstgroup.co.uk. 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.
Contacts at FirstGroup: Contacts at Brunswick Group:
Marianna Bowes, Head of Investor Relations Stuart Butchers, Head of Corporate Communications corporate.comms@firstgroup.co.uk Tel: +44 (0) 20 7725 3354 Andrew Porter / Simone Selzer Tel: +44 (0) 20 7404 5959
Contacts at Panmure Liberum: Contacts at RBC Capital Markets:
Nicholas How / John Fishley Tel: +44 (0) 20 3100 2000 James Agnew / Jack Wood Tel: +44 (0) 20 7653 4000
Notes
1 ‘Adjusted revenue’ is defined as revenue excluding that element of DfT
TOC revenue, and related intercompany eliminations, where the Group takes
substantially no revenue risk. The Adjusted revenue measure includes
management and performance fee income earned by the Group from its DfT TOC
contracts.
2 ‘Adjusted operating profit/(loss)’ and ‘Adjusted profit/(loss) before
tax’ are before adjusting items as set out in note 3 to the financial
statements
3 ‘Adjusted earnings’ are shown before net adjusting items and excludes
IFRS 16 impacts in First Rail management fee operations. For definitions of
alternative performance measures and other key terms, see the definitions
section on pages 20-21.
4 ‘Adjusted EPS’ and EPS based on weighted average number of shares in the
period of 608.5m (H1 2024: 697.7m) reflecting the current year and prior year
share buybacks.
5 ‘Adjusted net debt/(cash)' is bonds, bank and other debt net of free cash
(i.e. excludes IFRS 16 lease liabilities and ring-fenced cash).
6 ‘H1 2024 statutory operating loss of £(41.4)m included predominantly
non-cash charges of £142.3m relating to the Group’s termination of its
participation in two Local Government Pension Schemes during the year with an
offsetting £160.4m gain in the Condensed Consolidated Statement of
Comprehensive Income.
7 ‘Underlying’ adjusts for certain items which distort period-on-period
trends in our commercial bus business, described on page 21
Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR
6 Annex 1R: 1.1.
About FirstGroup
FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public
transport services. With £4.7 billion in revenue and around 30,000 employees,
we transported almost 2m passengers a day in FY 2024. 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. Each of
our divisions is a leader in its field: First Bus is one of the largest
regional bus operators in the UK, serving more than 20% of the population in
the UK with a fleet of around c.4,800 buses, and carrying more than a million
passengers a day. First Rail is one of the UK’s largest rail operators, with
many years of experience running long-distance, commuter, regional and sleeper
rail services. We operate a fleet of c.3,700 locomotives and rail carriages
through three DfT contracted train operating companies: WCP (incorporating
Avanti West Coast and West Coast Partnership Development), GWR and SWR) and
two open access routes (Hull Trains and Lumo). We are formally committed to
operating a zero emission First Bus fleet by 2035, and First Rail will help
support the UK Government’s goal to remove all diesel-only trains from
service by 2040. During FY 2024 FirstGroup was named as one of the world’s
cleanest 200 public companies for the fifth consecutive year and achieved
Industry Top-Rated status for the first time with Sustainalytics. We provide
easy and convenient mobility, improving quality of life by connecting people
and communities. Visit our website at www.firstgroupplc.com and follow us
@firstgroupplc on X.
CEO review
Introduction
I am pleased to report a robust performance during the first half of our 2025
financial year. We are reporting Group Adjusted operating profit of £100.8m
compared to £100.6m in H1 2024 which was positively affected by an extra week
of trading and higher than accrued final variable fee payments for FY 2023 in
our DfT TOCs (a c.£13m uplift). Our Adjusted Earnings per share has increased
to 8.5p from 8.1p in the prior year, reflecting the benefit of the buyback
programme that was completed in August.
Focus on operational delivery and modal shift
Operational excellence and driving modal shift from car and air travel to bus
and train are key to our strategy. We strive to make use of our leading
positions and expertise to ensure the best possible customer experience, to
deliver reliable, cost efficient services, drive demand, add capacity, win key
contracts and grow our businesses.
In First Bus, we are benefiting from improved operational performance,
efficiency initiatives and our newer electric fleet which have resulted in
volume growth and lower costs. The division has again grown its revenues and
profit, leaving it on track to achieve a 10% adjusted operating margin in the
second half. Passenger volumes have seen some further recovery despite the
seasonally quiet summer period. On an underlying basis7, mileage increased by
4% compared to H1 2024, with revenue per mile improving by 5%, to £6.19 in H1
2025.
First Bus's Adjacent Services revenues further increased due to contract wins
and extensions and the contribution of Ensignbus and York Pullman. After the
period end, we completed the acquisition of Anderson Travel and Lakeside
Group, further growing our Adjacent Services portfolio and allowing us to
enter new B2B and B2C coach services markets. We have also recently entered
into a new five-year contract with Flix Bus to operate eight new or expanded
coach routes. The acquisitions we have made in First Bus in the last few years
are anticipated to contribute combined annual revenues of c.£100m and EBIT of
c.£13m on a current run rate basis.
In First Rail we reported a 7% increase in passenger journeys during the
period, with a total of just over 132m journeys (H1 2024: 123m), 131m in the
DfT TOCs and 1.4m in Hull Trains and Lumo, our successful open access
operations. Financial performance has been in line with our expectations and
our focus remains firmly on operational delivery for our customers and
partners.
We successfully took over the operation of the London Cable Car contract at
the end of June following several months of mobilisation activity during which
we have built a positive working relationship with TfL. We look forward to
working with TfL to enhance the customer proposition and place the service at
the heart of its local community.
Leading in environmental and social sustainability
We were very pleased to announce in July that FirstGroup has achieved the
highest possible ESG rating by MSCI, AAA, a further endorsement of our
sustainability credentials.
During H1 2025, we have continued to make good progress in our First Bus
decarbonisation programme. Following successful applications with our local
authority partners to secure £16m through the UK Government’s ZEBRA 2
co-funding scheme earlier this year, we have been working hard to prepare our
depots and infrastructure for the delivery of electric buses in the coming
months. We now have eight fully or substantially electric depots across the UK
and c.15% of our bus fleet is zero emission.
We are also preparing to publish our first climate transition plan, in
alignment with the Transition Plan Taskforce (TPT) Disclosure Framework, to
further enhance transparency and accountability in our climate reporting
practices. The plan, which will be published in early 2025, will outline our
comprehensive strategy and pathway to achieve our climate transition goals,
detailing our approach to reducing greenhouse gas emissions, managing
climate-related risks and contributing to an economy-wide transition.
A period of change in UK bus and rail
As a major public transport operator in the UK we have a critical role to play
in the delivery of the country’s wider economic, social and environmental
goals. Following the UK general election in July our teams have been engaging
with the new government. We will continue to take a proactive approach,
demonstrating our strengths as an experienced, trusted partner for the
delivery of public transport services.
The rail and bus industries in the UK are set to see considerable change over
the next few years, with the National Rail Contracts set to move to public
ownership and a number of regions outside London planning to adopt the
franchising model in bus.
In rail, we have been one of the largest operators for more than 25 years,
during which we have worked successfully with a wide range of partners under
various contract types and delivered a number of significant rail
infrastructure and fleet upgrade projects. Companies such as ours bring
innovation, enhanced service delivery, private investment and focus on cost
control to an industry that needs it – our DfT TOCs have saved more than
£300m for the DfT in their annual business plans over the last three years.
Open access has been a hugely successful aspect of rail policy, providing
services to under-served communities, supporting local communities and
suppliers, creating jobs and additional capacity on core routes which help
drive modal shift away from more carbon-intensive modes of transport. It has
great potential for helping to drive future social mobility and economic
growth; any future rail policy must fully embrace open access. We know that
growth and innovation are key for the future of the railway and are committed
to working with our partners to provide competitive, sustainable and improved
services for all passengers and communities. Furthermore, if the applications
we have submitted to grow our open access portfolio are successful, the new
services will not only benefit under-served communities and create operational
jobs, they will also support the wider value chain through train manufacturing
and associated jobs in the UK.
Likewise, as one of the largest regional bus companies in the UK, First Bus is
the leading operator in the majority of its local areas, carrying more than a
million passengers a day. First Bus is playing a leading role in the
transformation of the bus sector, leveraging its proven capability and
expertise to work in close partnership with national, regional and local
governments, in every regulatory environment, to ensure the best outcomes for
customers. We believe this can be achieved with a focus on bus priority and
congestion tackling measures, ‘bus first’ planning decisions, targeted
fare initiatives, improved reliability, enhanced facilities and accessibility
for customers, attracting workers to the bus sector and making bus a leading
visible indicator in our green transition.
Significant scope to grow and diversify our portfolio
With our cash generative businesses and considerable balance sheet capacity we
are able to take advantage of value accretive opportunities to grow and
diversify our portfolio and ensure we increase our profitability and remain a
profitable, resilient business. When assessing any opportunity for the Group,
we have a disciplined capital allocation policy and a strict set of criteria.
We will always seek to ensure that the opportunities we explore are
complementary to our existing portfolio and the Group’s strategy, thoroughly
assessed for risks and opportunities and operated within a well-understood
contractual, political and regulatory environment with an appropriate balance
of risk and reward.
In First Rail, we are focused on growing in open access, identifying where we
can scale our Additional Services businesses, bidding for new contracts and
identifying new open access opportunities in the UK, as well as monitoring
open access opportunities in Europe as the market continues to liberalise.
In August we acquired Grand Union Trains WCML Holdings Limited, which owns the
track access rights granted by the Office of Rail and Road (‘ORR’) to run
a new open access rail service on the West Coast Mainline from London Euston
to Stirling. The current track access agreement runs from May 2025 for a
period of five years and includes four return services a day between London
Euston and Stirling, and a fifth return service between Euston and Preston.
The new service will call at a number of intermediate stations in England and
Scotland, including Whifflet, Greenfaulds and Larbert which will have their
first direct services to London. We look forward to providing further detail
including on rolling stock and an operational start date in due course.
Earlier this year we submitted applications to the Office of Rail and Road
(‘ORR’) for a new Hull Trains London-Worksop-Sheffield service and a new
Lumo Rochdale-London service, as well as for the extension of a number of
Lumo’s daily services to and from Glasgow and for additional paths on both
Lumo and Hull Trains. Positive discussions on these applications continue with
the ORR and Network Rail, supported by detailed business case and performance
modelling conducted by our internal teams and third-party experts. We expect
to start being notified of updates and decisions in the first half of next
year.
In addition to growing in open access we are bidding for new contracts,
including TfL’s upcoming Elizabeth Line contract, for which we submitted a
joint bid in July 2024, ahead of the anticipated mobilisation start date in
May 2025. The First Rail Consultancy team have also participated in a
high-quality consortium bid for the consultancy services relating to the
design, build and operation of a new high frequency electrified intercity rail
service, a major infrastructure rail project between Quebec City and Toronto.
In H1 2025 our First Rail Additional Services businesses, First Customer
Contact, Mistral Data and First Rail Consultancy generated revenues of £20.0m
(H1 2024: £18.2m). We are looking at ways to scale these businesses as we
believe that private sector ancillary services suppliers will continue to be
vital to the success of the rail industry, bringing experience, expertise and
benefits to the sector.
In First Bus, we have identified a clear plan to navigate the market
transition, to grow and diversify our portfolio and steadily grow our
earnings. To do this, we intend to win our fair share of the franchise market
across the UK, develop our existing commercial bus business, grow our Adjacent
Services earnings and market share, and we will continue to actively evaluate
a pipeline of inorganic growth opportunities in existing and new areas across
the UK. Coupled with this, we will make use of our property portfolio and
decarbonisation credentials to drive innovation, leverage electrification
efficiencies and generate new revenue streams in the energy sector.
With regards to franchising, a number of Mayoral authorities have indicated
that franchising is their preferred future option, representing an opportunity
to gain market share by bidding for contracts in areas where we currently
operate and entering new regions. Our mission is for more people to use the
bus and we will participate in future franchise bids and partnership
opportunities, positioning First Bus as the partner of choice, capable of
consistent and competitive service delivery.
In Adjacent Services, we have built an experienced business development team
and are leveraging our operational strengths and decarbonisation capabilities
to extend and win new contracts. We are also benefiting from the contribution
of Ensignbus and York Pullman and continuing to grow our market share and
geographical footprint, including through the recent acquisitions and contract
wins mentioned above. We already have a strong regional footprint and a
credible market position, but there is considerable scope for us to grow in
this market, specifically in airport services, workplace shuttles and B2B and
B2C coach services, which offer stable earnings with attractive margins.
Board changes
At our AGM in July, David Martin announced his intention to retire from the
Board. I thank David for his contribution to the Group and the strategic
progress that he has overseen.
We were pleased to announce in September that Lena Wilson CBE will be joining
the Board as Chair on 1 February 2025. Lena is a highly experienced director
and Chair, currently a Non-Executive Director at NatWest Group plc, and has
held senior and Board roles at a number of listed and private companies
including Scottish Power Renewables Limited, Intertek Group plc, AGS Airports
Limited. Lena was also Chief Executive of Scottish Enterprise from 2009 to
2017 and prior to that, a Senior Investment Advisor to The World Bank in
Washington DC. We are delighted that Lena will be joining us to chair our
Board, bringing substantial experience from both the public and private
sectors combined with a strong track-record as a Non-Executive Director.
Corporate activity and capital allocation
Key corporate activity during the period has included the repurchasing the
remainder of the Group’s 2024 bonds and we have now fully discharged the
Group’s legacy Greyhound pension obligations which has resulted in a one-off
gain of £5.5m in the profit and loss statement in H1 2025.
We have maintained our strong balance sheet, reporting adjusted net debt of
£0.2m at period end, having invested in the electrification of our bus fleet
and infrastructure and returned c.£41m to shareholders via our buyback
programme. In line with our disciplined capital policy and the Group’s
continued strong financial performance, the Board has announced an additional
£50m on market share buyback programme and declared an interim dividend of
1.7p per share (H1 2024: 1.5p per share). This will result in a dividend
payment of c.£10m to be paid on 31 December 2024 to shareholders on the
register at 29 November 2024.
Outlook
Current trading and the Group’s outlook for FY 2025 is slightly ahead of the
outlook set out in the full year results in June 2024. We expect to make
further progress in First Bus, reaching a 10% adjusted operating margin in the
second half. Financial performance in First Rail is anticipated to be slightly
ahead of our prior expectations, reflecting growth achieved in open access and
a normal level of variable fee awards in the DfT TOCs (approximately two
thirds of the maximum available). Positive free cash generation, after
c.£125m of net cash capital expenditure in First Bus, the deployment of our
announced growth capital and progression of the £50m buyback programme, is
expected to result in a marginal net debt position at the end of FY 2025.
We anticipate that we will maintain our adjusted EPS in FY 2026 as we grow
earnings from First Bus and open access rail. Furthermore, the Group has a
strong pipeline of organic and inorganic growth opportunities, and the Board
remains committed to returning surplus cash to shareholders.
In First Bus we are well positioned to manage through the measures announced
in the recent budget that will affect the bus sector. Our team has the
experience to manage both the transition from the £2 fare cap to the new £3
cap in January 2025 and the impact of the increases in employers’ national
insurance, through the implementation of a combination of yield and
operational efficiencies. We welcome the announcement of continued government
support for the bus sector, with an extension to the Bus Service Improvement
Plan (‘BSIP’) and Bus Service Operators Grant (‘BSOG’) funding
packages, and the £200m increase in City Region Sustainable Transport
Settlements (‘CRSTS’) funding, as well as support for local transport
beyond the city regions.
In First Rail, the Government’s announced policy is to bring the National
Rail Contracts into public ownership at the earliest possible opportunity. As
the contracts transition, we anticipate a cash inflow of c.£80m from the DfT
TOCs, including any reorganisation costs the Group may incur, over a
three-year period from April 2025 with cash received from the management fees
a year in arrears. This cash receipt includes the earnings from the
division’s Additional Services businesses that are expected to continue
supporting the DfT TOCs after their contracts end, as required under the
National Rail Contracts.
Looking further ahead, First Bus and our First Rail open access businesses are
expected to continue to grow from their existing strong bases. They are also
expected to remain cash generative following a period of significant
investment in the First Bus fleet and open access rail is capital light, with
rolling stock funded through operating leases in line with track access
agreements.
Conclusion
H1 2025 has been another strong period of delivery for the Group. We still
have more to do, and as we enter a period of transition, we will continue to
work with government and all our partners to make use of our extensive
experience and expertise to deliver the best possible services and encourage
more people to use bus and rail.
There is no doubt that our businesses will change over the next few years, but
our core strategy around operational excellence, encouraging modal shift and
leading in environmental and social sustainability will underpin everything
that we do. Furthermore, we have considerable growth opportunities which puts
FirstGroup in a strong position. We will continue to invest, with strict
discipline, to grow and diversify our portfolio and maintain our earnings
trajectory as well as remaining focused on delivering potential further
capital returns to shareholders.
Graham Sutherland
Chief Executive Officer
14 November 2024
Business Review
First Bus
£m £m
H1 2025 H1 2024 Change
Revenue 513.7 504.9 8.8
Adjusted operating profit 41.1 36.0 5.1
Adjusted operating margin 8.0% 7.1% 90bps
Adjusted EBITDA 72.7 68.8 3.9
Adjacent Services revenue 125.7 116.2 9.5
Passenger volumes (m) 204 210 (3)%
Operational mileage (m) 83 84 (1)%
Revenue per mile (£) 6.19 6.01 0.18
Net operating assets 658.3 512.4 145.9
Net capital expenditure 52.4 88.7 (36.3)
Return on Capital Employed 1 11.4% 11.3% 10bps
1 Return on capital employed is a measure of capital
efficiency and is calculated by dividing adjusted operating profit after tax
on a trailing 12-months basis using a normalised tax rate basis of 25% by
average period-end assets and liabilities excluding debt items.
First Bus generated revenue of £513.7m in H1 2025 compared to £504.9m in H1
2024, which had an extra week of trading and included the operation of the
Oldham depot in Manchester, offsetting a £12.4m reduction in government
funding. Total passenger revenue increased to £385.8m (H1 2024: £377.1m),
with revenue per mile increasing from £6.01 in the prior period, to £6.19.
Excluding the extra week in H1 2024 and the transfer of First Bus operations
in Oldham to TfGM, underlying passenger volumes increased 4% compared with the
prior period, with total mileage also up 4%.
Passenger volumes have continued to be underpinned by our data-led service
improvements, the free travel for under-22s scheme in Scotland, and the £2
fare cap in England that has grown patronage, mostly in markets with longer
journey fares that were typically much more expensive previously.
Under the Scottish Government’s under-22s scheme, operators are reimbursed a
proportion of the cost of a full adult fare. Under the £2 fare cap scheme in
England, operators agree a reimbursement schedule in advance with the DfT
based on the projected cost to the operator for charging a flat £2 fare for
journeys that would otherwise have cost more.
The £2 fare cap in England is due to be replaced by a £3 fare cap from 1
January to 31 December 2025. Whilst the terms and conditions have not yet been
confirmed, we believe that the £3 cap will still protect the majority of our
customers from the largest increases back to uncapped fares, and in turn,
protect the passenger volume uplifts we have seen on these routes. We are
currently reviewing our pricing strategy ahead of the introduction of the £3
cap.
The extra week of trading in H1 2024 added c.£1.4m of adjusted operating
profit. In H1 2025 adjusted operating profit increased to £41.1m (H1 2024:
£36.0m), an adjusted operating profit margin of 8.0% (H1 2024: 7.1%), leaving
the division on track to achieve a 10% margin in H2 2025.
The return on capital employed increased to 11.4% during the period (H1 2024:
11.3%). This reflects the growth in the division’s adjusted operating
profit, substantially offset by the accelerated investment in the
electrification of our fleet and infrastructure that is anticipated to
increase future profitability due to lower operating costs and the benefits of
adjacent revenue streams.
Improved operational delivery
As a result of the actions we have taken, including the use of our
industry-leading data tools, we are delivering better quality mileage,
aligning services to demand, implementing smarter fares and driving
operational and cost efficiencies throughout the division. During H1 2025 we
made use of our granular data to implement a number of fare increases.
We have also continued to invest in our workforce to provide enhanced benefits
and learning opportunities and attract more people to work at First Bus. In H1
2025 this included a ground-breaking new learning agreement with our trade
union partner, Unite the Union. Six new learning centre hubs will be created,
offering all frontline colleagues a dedicated facility that puts continual
learning opportunities outside of their day-to-day skillset at the forefront,
equipping them with new skills to drive forward their careers and better
support First Bus customers. Both vocational and non-vocational modules will
be available to colleagues, alongside support from a trained and full-time
Trade Union Learning Representative. We are very proud of this important
initiative which builds on the strong foundations of an ongoing education
partnership with Unite the Union that has spanned over two decades.
Thanks to our enhanced driver recruitment and training programmes, we now have
more drivers (a net increase of 75 drivers in the period vs. the prior year)
which contributed to us running 98.4% of our scheduled mileage (H1 2024:
98.0%). We are also benefiting from our newer electric fleet, with an average
fleet age in H1 2025 of 9.0 years, down from 10.1 years in FY 2022.
Inflationary pressures continued during the period. Costs increased due to
inflation by c.3%, principally in wages where there was a 5% average increase
in driver pay awards, much of which is carried over from agreements in the
previous financial year; we have now settled over 80% of our pay awards for FY
2025. Pricing changes of c.£21m offset cost inflation during H1 2025. We have
fuel and electricity hedging programmes in place to mitigate in-year cost
inflation and overall volatility of fuel and energy costs and these programmes
continue to evolve as we transition the First Bus fleet to zero emission.
Growing our share of the Adjacent Services market
We have built an experienced business development team and are successfully
leveraging our operational strengths, infrastructure and decarbonisation
credentials to extend existing and win new contracts. This allows us to
maximise commercial return through longer-term, higher value contracts and
grow both our market share and geographical footprint.
Revenue from Adjacent Services increased to £125.7m in H1 2025 (H1 2024:
£116.2m). As well as benefiting from the contribution of Ensignbus and York
Pullman, we have continued to win new contracts and successfully negotiate
extensions to existing contracts. These have included contracts within our
workplace shuttle services for a number of high-profile brands and Park & Ride
contracts in Taunton, Portsmouth and Norwich.
Earlier this month we were also pleased to announce a new five-year contract
with FlixBus to operate eight coach routes across the UK spanning from
Penzance to Newcastle. As part of the Group’s investment in the partnership
First Bus is purchasing 21 express coaches, with plans to recruit 65 new
drivers across seven First Bus depots in three regions. The services are due
to be launched from April to July 2025, with First Bus providing staff, all
vehicle-related requirements and service delivery and FlixBus providing the
platform for passengers. The coaches will be branded in the full FlixBus
livery, including uniform for the drivers.
We are also growing our business through strategic bolt-on acquisitions which
in recent weeks has included Anderson Travel and Lakeside Group. These are all
well established, profitable businesses that will grow our share of the B2B
and B2C coach market and allow us to enter new markets. The acquisitions we
have made in First Bus in the last few years will contribute combined annual
revenues of c.£100m and EBIT of c.£13m.
We have a strong regional footprint and a credible market position in adjacent
services, but there is considerable scope for us to grow in this market,
specifically in airport services, workplace shuttles and B2B and B2C coach
services, which offer stable earnings with attractive margins.
Franchising and partnerships
A number of Mayoral authorities outside London have indicated that franchising
is their preferred future option, including in some areas where they currently
operate, and some where we do not. We continue to build relationships and have
a strong commercial team ready to take advantage of franchising opportunities
as they develop, bidding for contracts in areas where we currently operate,
and to enter new regions.
We have experience of both the partnership and franchise models, as the key
operator in the successful Enhanced Partnership Scheme in Leicester and
through our Rochdale franchise contracts in Manchester. Our mission is for
more people to use the bus, and we will participate in future franchise bids
and partnership opportunities, positioning First Bus as the partner of choice,
capable of consistent and competitive service delivery. We will continue to
adapt our business to deliver great value, to shape networks to suit where and
when people want to travel, to serve communities and grow local economies in a
sustainable way. Regardless of the model, close partnerships with local
government stakeholders are essential for the thriving local bus networks we
all want to see, and we are committed to working with our partners locally and
nationally to achieve this.
Decarbonisation
Earlier this year we announced that we had worked successfully with our local
authority partners to secure £16m through the UK Government’s ZEBRA 2
co-funding scheme to support bus and fleet decarbonisation across four of our
regions.
We have made good progress in preparing our depots for the delivery of
electric buses. In August 2024 we were pleased to announce that three of our
depots, in Leicester, York and Norwich, had been officially verified as net
zero emission depots, some of the first in the country to achieve this
milestone. The depots have built on the progress of their fully electric
commercial bus fleets by investing in the necessary additional carbon
reduction requirements to claim net zero status. We have five further depots
across the UK substantially electrified, and we have continued to grow our
fleet of electric buses to over 650, c.15% of our fleet.
We have more than 650 charging outlets and continue with our successful
third-party charging arrangements, including with DPD, Openreach and various
public services providers across multiple depots in England and Scotland. We
also have a purpose-built hub at our Summercourt depot in Cornwall, providing
direct access for the public to eight rapid charging outlets. In addition, we
have recently announced a new agreement with Centrica for their drivers to use
the chargers at our Leicester depot and have signed our first agreement with a
customer operating an eHGV fleet and anticipate this being an area of focus
going forwards.
Another significant milestone for First Bus has been our entry into the
‘repowers’ market. A repowered bus is a mid-life diesel or hybrid bus that
has been converted to run entirely on electricity. Along with all the regular
benefits of electric buses such as reduced emissions and lower operating
costs, repowered vehicles are cheaper, can extend the lifespan of buses and
avoid the emissions of manufacturing new vehicles. In 2022 we partnered with
Equipmake to upgrade twelve electric buses in York and more recently, we
placed the UK’s largest single repower order with Wrightbus for 32 electric
conversions, scheduled for delivery in H2 2025. These orders are an important,
incremental component of our decarbonisation strategy and if successful, we
will consider opportunities to place further orders in the future.
In addition to our recent orders for repowers, in H1 2025 we invested £1m
into KleanDrive, a leader in the electric conversion of heavy vehicles, such
as buses, coaches and trucks. KleanDrive’s modular electric drivetrains
combines next-generation technology from top tier suppliers with deep
engineering expertise to provide a flexible, bespoke solution to quickly
repower heavy duty vehicles to reduce emissions, extend vehicle life and
materially lower costs. This is our first venture investment and is consistent
with our focus on accessing new and innovative solutions in decarbonisation
through targeted investments.
We continue to play a leading role in bus and infrastructure electrification
both through our programme and through sharing our learnings with other
operators and local authorities, and we are now able to leverage our
decarbonisation credentials when we bid for new contracts. Furthermore, thanks
to the progress we have made to date, we can now see the benefits of operating
fully electric bus depots and firmly believe that the electrification of our
fleet and infrastructure will further transform our business and provide a
number of value accretive adjacent revenue streams. It will allow us to
standardise and reduce the size of our fleet to drive efficiency and lower
engineering costs whilst delivering the same mileage, and by making use of
smart charging software we will be able to optimise our energy use, increase
battery efficiency and potentially extend battery life.
Looking ahead
We expect to make further progress in H2 2025, reaching a 10% adjusted
operating margin, driven by operational improvements, efficiency initiatives
and the division’s newer fleet.
In First Bus we are well positioned to manage through the measures announced
in the recent budget that will affect the bus sector. Our team has the
experience to manage both the transition from the £2 fare cap to the new £3
cap in January 2025 and the impact of the increases in employers’ national
insurance, through the implementation of a combination of yield and
operational efficiencies. We welcome the announcement of continued government
support for the bus sector, with an extension to the Bus Service Improvement
Plan (‘BSIP’) and Bus Service Operators Grant (‘BSOG’) funding
packages, and the £200m increase in City Region Sustainable Transport
Settlements (‘CRSTS’) funding, as well as support for local transport
beyond the city regions.
In FY 2026 we anticipate growth in adjusted operating profit. We expect
capital expenditure in the division will be lower than in FY 2025, reflecting
depot build and continued electrification infrastructure investment, offset by
a lower level of fleet capital expenditure following a period of higher capex
which has resulted in the division lowering its average fleet age to c.9 years
(from 10.1 years in FY 2022).
Looking further ahead, we will navigate the market transition as the
Government introduces new policies, grow and diversify our portfolio and
steadily grow our earnings. To do this, we intend to win our fair share of the
franchise market across the UK, develop our existing commercial bus business,
grow our Adjacent Services earnings and market share, and we will continue to
actively evaluate a pipeline of inorganic growth opportunities in existing and
new areas across the UK. We will also make use of our property portfolio and
decarbonisation credentials to drive innovation, leverage electrification
efficiencies and generate energy-related revenue streams. Underpinning this,
we firmly believe that government policy, favourable demographics and
environmental and societal trends will support sustainable growth in the UK
bus sector going forward.
First Rail
£m £m
H1 2025 H1 2024 Change
Adjusted revenue from DfT TOCs 1 23.7 34.7 (11.0)
Revenue from open access and additional services 2 112.3 100.0 +12.3
First Rail Adjusted Revenue 136.0 134.7 +1.3
Adjusted operating profit from DfT TOCs 44.1 54.9 (10.8)
Adjusted operating profit from open access and additional services 23.8 22.1 +1.7
First Rail adjusted operating profit 67.9 77.0 (9.1)
Passenger journeys (m) – DfT TOCs 3 130.9 122.1 +8.8
Passenger journeys (m) – open access operations 1.4 1.3 +0.1
Passenger journeys (m) – Total 132.3 123.4 +8.9
1 ‘Adjusted revenue’ is revenue excluding that element
of DfT TOC revenue, and related intercompany eliminations, where the Group
takes substantially no revenue risk. The Adjusted revenue measure includes
management and performance fee income earned by the Group from its DfT TOC
contracts
2 Includes intra divisional eliminations
3 Totals exclude TPE: H1 2024: 3.3m passenger journeys
The First Rail division reported total adjusted revenue of £136.0m in H1 2024
(H1 2024: £134.7m). The division’s open access operations contributed
£51.9m in revenue for the period, up from £46.3m in the prior year. The
division’s Additional Services businesses delivered revenue of £60.4m (H1
2024: £54.0) and adjusted operating profit of £5.7m (H1 2024: £6.4m).
The DfT TOCs reported adjusted operating profit for the period of £44.1m (H1
2024: £54.9m). As previously reported, during H1 2024 the final variable fee
payments due for the DfT TOCs for the FY 2023 fiscal year were agreed with the
DfT at a rate ahead of the amounts accrued in the Group’s FY 2023 financial
statements, resulting in a c.£13m uplift in the division’s adjusted
operating profit in H1 2024.
Rail attributable net income from the DfT TOCs – being the Group’s share
of the management fee income available for distribution from the GWR, SWR and
WCP DfT contracts – was £14.0m (H1 2024: £23.2m which included the final
variable fee payments for FY 2023 mentioned above, as well as the contribution
of TransPennine Express which was operated by the Group until 28 May 2023).
The division’s two open access operations Lumo and Hull Trains delivered
further growth in adjusted operating profit in H1 2025, to £18.1m (H1 2024:
£15.7m). This was due to robust passenger volumes and effective yield
management, including some inflationary increases in fares, which helped
offset higher costs.
To address energy cost inflation, our DfT TOCs and open access operations are
members of industry buying groups in order to mitigate the long-term impact of
electricity costs. For our open access operations, total electricity costs
represent a material proportion of their total costs; these costs decreased by
c.25% in H1 2025 against H1 2024.
Focused on operational delivery in our DfT TOCs
Our three DfT TOCs operate under National Rail Contacts (NRCs), under which
the DfT retains substantially all revenue and cost risk (including for fuel,
energy and wage increases). There is a fixed management fee and the
opportunity to earn an additional variable fee. The punctuality and other
operational targets required to achieve the maximum level of variable fee
under the contracts are designed to incentivise service delivery for
customers. During FY 2024 the DfT introduced some revenue upside potential for
operators within the quantitative variable fee metrics, with a Revenue Outturn
Mechanism (ROM), due to run until 31 March 2025. The ROM represents an
incremental fee opportunity for the Group for FY 2025 if we are able to grow
the revenues of the NRC contracts within certain thresholds.
We are an experienced UK rail operator and we are focused on working
collaboratively with the DfT and our industry partners and stakeholders to add
value, innovate and enhance our service offering, alongside the execution of a
number of major investment programmes.
During H1 2025 Avanti West Coast started the roll out of its new £350m fleet
of ten seven-car electric and 13 five-car bi-mode Hitachi trains across the
network. The fleet upgrade will not only improve the customer experience, but
it will also lower emissions compared to the trains that will be replaced. In
addition, the £117m investment programme to refurbish Avanti’s electric
Pendolino fleet was completed and the final refurbished train went into
service in June.
Avanti West Coast also extended its Superfare ticket to more routes to mark
the popular low-cost fare’s first anniversary. In a survey of Superfare
customers, the majority said they would have not travelled or would have done
so by a different mode, demonstrating how the Superfare ticket is successfully
attracting people to use our services.
At SWR, the team started the phased introduction of its new fleet of Alstom
Class 701 trains and aim to complete the full rollout of the fleet during the
next financial year. In addition, a number of newly refurbished Class 458/4
trains entered service between London Waterloo, Hounslow, Weybridge and
Twickenham, to improve the customer offering.
GWR worked successfully with its partners to open Ashley Down station in
Bristol at the end of September, connecting the local community to the wider
rail network for the first time in sixty years. The project was part of a
£300m investment by the West of England Mayoral Combined Authority, in
partnership with GWR, Network Rail, and Bristol City Council, to bring rail
travel within easy reach of more people than ever before.
GWR’s industry-first fast-charge battery-only train trial has now been
running for more than six months, gathering insights to be shared with the DfT
and wider industry to help shape the industry’s future decarbonisation
plans. More than 300 return trips have been completed between West Ealing and
Greenford, testing the technology’s capability in all elements, from extreme
heat to heavy rain. The work the team has done has successfully raised the
profile of fast charge as part of the potential solution for the
decarbonisation of lines that are difficult or expensive to reach through
traditional electrification.
Leveraging our expertise and capabilities in Additional Services
Our First Rail Additional Services businesses - First Customer Contact
(‘FCC’), Mistral Data and First Rail Consultancy, generated revenues of
£20.0m in H1 2025, up from £18.2m in H1 2024, leveraging our extensive
experience and expertise. We are looking at ways to scale these businesses as
we believe that private sector ancillary services suppliers will continue to
be vital to the success of the rail industry, bringing experience, expertise
and benefits to the sector.
FCC provides customer relations, delay repay services and fraud prevention and
management services to a number of train operating companies including TPE. In
H1 2025, working with technology partners, FCC implemented a number of
artificial intelligence tools to further improve the customer handling
experience.
During H1 2025, the team at Mistral Data have continued to develop new modules
and services and to market their range of products to UK and international
industry participants. Products include cloud-based tools focused on transport
operations, staff messaging, customer engagement, revenue management, business
intelligence and remote asset management. New modules and services are being
developed that will be available and marketed to both existing and potential
new customers.
First Rail Consultancy provides expertise in all the major facets of railway
operations to a range of operating companies, addressing both current services
and the cost-effective delivery of major infrastructure projects, rolling
stock procurement and upgrades. During H1 2025, the team qualified to work
under a number of industry-wide framework agreements and continued to support
a wide range of clients in the UK, as well as working on an international
consultancy project.
Continued delivery in open access
First Rail’s two open access businesses, Lumo and Hull Trains, where we bear
all revenue and cost risk and opportunity, have continued to perform well in
H1 2025. Demand has remained strong, and they also remain two of the most
reliable operators in the UK.
Hull Trains has continued to run a ten-car service at peak demand times
(typically a five-car service) to match demand; seat capacity has grown by
13%, with the seat utilisation remaining stable at 68%. Hull Trains reported a
15% increase in revenue, to £23.3m (H1 2024: £20.2m).
At Lumo, profit is driven predominantly by improving demand and effective
yield management, whilst still offering competitive prices. Revenue increased
by 10% to £28.6m in H1 2025 (H1 2024: £26.1m), with further improvement in
yields offsetting slightly higher costs. Seat capacity utilisation also rose,
to 80% from 78% in the prior year.
Growing our successful open access business
Growing our successful open access rail portfolio is a key priority for the
Group and delivers against our strategic aims of driving modal shift, leading
in social and environmental sustainability and growing and diversifying our
businesses. We are growing through efficiency improvements, acquiring and
applying for routes where we can connect under-served communities and add
value for our stakeholders.
In August we acquired Grand Union Trains WCML Holdings Limited, which owns the
track access rights granted by the Office of Rail and Road (‘ORR’) to run
a new open access rail service on the West Coast Mainline from London Euston
to Stirling. The current track access agreement runs from May 2025 for a
period of five years and includes four return services a day between London
Euston and Stirling, and a fifth return service between Euston and Preston.
The new service will call at a number of intermediate stations in England and
Scotland, including Whifflet, Greenfaulds and Larbert which will have their
first direct services to London. The new service will provide more choice for
passengers with significantly increased direct connections to and from London
and central and southern Scotland, making use of available capacity on the
network. We will provide further detail, including on rolling stock and an
operational start date in due course.
In January 2024, we announced that we had submitted an application for a new
open access service to provide a fast link between London and Sheffield,
comprising two return journeys a day from London King’s Cross, calling at
Retford, Worksop, Woodhouse and Sheffield. It would be the first regular
service from London King’s Cross to Sheffield since 1968 and Worksop in
Nottinghamshire would have its first regular direct London train service in
decades. The application is currently being reviewed as part of East Coast
Mainline (‘ECML’) December 2025 timetable review process with an update
anticipated in the first half of 2025.
We also submitted an application to the ORR for a new open access service
between Rochdale and London with a December 2027 start date. The application
includes six return journeys a day, providing a direct Rochdale to London link
via Manchester Victoria which last ran in 2000. The service would be operated
under the successful Lumo brand, which has transformed long-distance
connectivity between London and Edinburgh and helped support a growth in
passenger numbers for all operators on the East Coast Mainline. It is
anticipated that the trains on this new route will be new, UK manufactured,
electric and battery powered trains.
Following discussions with Network Rail Scotland and Transport Scotland, we
also submitted an application for an extension of some of Lumo’s services to
Glasgow, the expansion of some of Lumo’s services to ten car operations, as
well as for a sixth return Lumo service between London and Newcastle and for
Hull Trains, an eighth return service between London and Hull. These
operations could commence in line with ECML timetable change.
Positive discussions on these applications continue with the ORR and Network
Rail, supported by detailed business case and performance modelling conducted
by our internal teams and third-party experts.
Transport for London contracts
Having operated London Trams on behalf of Transport for London (‘TfL’) for
a number of years, in March 2024, we were delighted to announce that we had
been awarded the contract to operate the London Cable Car on behalf of TfL
from the end of June 2024, with estimated revenues of c.£60m over the
eight-year contract period. We successfully took over the operation at the end
of June following several months of mobilisation activity. We look forward to
working with TfL to enhance the customer proposition and place the service at
the heart of its local community.
As previously announced, in July 2024 we submitted a bid for the Elizabeth
Line contract in partnership with Keolis SA.
A period of transition in UK rail
The UK rail industry is set to see considerable change over the next few
years. We have been one of the largest operators for more than 25 years,
during which we have worked successfully with a wide range of partners under
various forms of contract types and delivered a number of significant rail
infrastructure and fleet upgrade projects. Companies such as ours bring
innovation, enhanced service delivery, private investment and focus on cost
control to an industry that needs it – our businesses have saved more than
£300m for the DfT in the last three years.
Furthermore, as we look to grow our open access portfolio, we recognise what
successful open access services can achieve. They can provide new connections
for under-served communities, add capacity on core routes to help drive modal
shift away from more carbon-intensive modes of transport, support local
businesses and suppliers, create jobs and help to drive social mobility and
future economic growth.
We know that growth and innovation are key for the future of the railway and
are committed to working with our government partners to provide competitive,
sustainable and improved services for all passengers and communities.
Furthermore, if the applications we have submitted to grow our open access
portfolio are successful, they will not only create operational jobs, but it
could also support the wider value chain through train manufacturing and
associated jobs in the UK.
Looking ahead
Financial performance in H2 2025 is expected to be slightly ahead of our prior
expectations, reflecting growth achieved in open access and a normal level of
variable fee awards in the DfT TOCs (approximately two thirds of the maximum
available).
It is the Government’s announced policy to bring the National Rail Contracts
into public ownership at the earliest possible opportunity. As the contracts
transition, we anticipate a cash inflow of c.£80m from the DfT TOCs,
including any reorganisation costs the Group may incur, over a three-year
period from April 2025 with cash received from the management fees a year in
arrears. This cash receipt includes the earnings from the division’s
Additional Services businesses that are expected to continue supporting the
DfT TOCs after their contracts end, as required under the National Rail
Contracts.
Our open access businesses are expected to continue to grow from their
existing strong base and will remain capital light, with rolling stock funded
through operating leases in line with track access agreements. The addition
of the London to Stirling service will add capacity, albeit with a lower
operating profit margin than our existing services due to comparatively higher
fleet costs.
As the UK rail industry goes through this period of transition, we are focused
on growing in open access, identifying where we can scale our Additional
Services businesses, bidding for new contracts including upcoming TfL tenders,
and identifying new open access opportunities in the UK, as well as monitoring
open access opportunities in Europe as the market continues to liberalise.
Financial review
Adjusted revenue from continuing operations increased to £649.6m (H1 2024:
£634.8m). First Bus revenue increased by 2% to £513.7m, principally
reflecting underlying passenger revenue growth of 10% offset by reduced
government funding and the additional week in H1 2024 that added £19m. First
Rail saw increased revenue across its open access and additional services
businesses, offset by lower management fees in the DfT TOCs as H1 2024
included an uplift for higher than accrued FY 2023 fees.
Operating performance
Adjusted operating performance by division is as follows:
26 weeks to 28 September 2024 27 weeks to 30 September 2023 53 weeks to 30 March 2024
Adjusted Revenue 1 Adjusted operating profit 2 Adjusted operating margin 2 Adjusted Revenue Adjusted operating profit 2 Adjusted operating margin 2 Adjusted Revenue Adjusted Adjusted
£m £m % £m £m % £m operating profit 2 operating margin 2
£m %
First Bus 513.7 41.1 8.0 504.9 36.0 7.1 1,012.2 83.6 8.3
First Rail 136.0 67.9 49.9 134.7 77.0 57.2 285.0 143.3 50.3
Group items/ eliminations 3 (0.1) (8.2) n/a (4.8) (12.4) n/a (5.4) (22.6) n/a
Continuing operations 649.6 100.8 15.5 634.8 100.6 15.8 1,291.8 204.3 15.8
Discontinued operations 4 - - n/a - (2.2) n/a - (1.9) n/a
Total 649.6 100.8 15.5 634.8 98.4 15.5 1,291.8 202.4 15.7
Statutory operating performance by division is as follows:
26 weeks to 28 September 2024 27 weeks to 30 September 2023 53 weeks to 30 March 2024
Revenue Operating profit Operating margin Revenue Operating profit Operating margin% Revenue Operating profit Operating margin
£m £m % £m £m £m £m %
First Bus 513.7 41.1 8.0 504.9 (106.3) (21.1) 1,012.2 (63.3) (6.3)
First Rail 1,843.0 67.9 3.7 1,721.9 77.0 4.5 3,738.4 143.3 3.8
Group items 3 (12.6) (8.7) n/a (19.8) (12.1) n/a (35.5) (33.5) n/a
Continuing operations 2,344.1 100.3 4.3 2,207.0 (41.4) (1.9) 4,715.1 46.5 1.0
Discontinued operations 4 - 5.9 n/a - 0.1 n/a - (5.3) n/a
Total 2,344.1 106.2 4.5 2,207.0 (41.3) (1.9) 4,715.1 41.2 0.9
1‘ Adjusted revenue’ is revenue excluding DfT TOC revenue, and
related intercompany eliminations, where the Group takes substantially no
revenue risk
2‘Adjusted operating profit’ and “Adjusted operating margin” are
before adjusting and certain other items as set out in note 3 to the interim
financial statements.
3Includes elimination of intra-group trading between Bus and Rail divisions,
and charges relating to central management and other items.
4Discontinued operations relates to the Group’s residual Greyhound US
activities.
Adjusted operating profit from continuing operations was £100.8m (H1 2024:
£100.6m), reflecting growth in First Bus and lower central costs offset by
First Rail. First Bus benefited from underlying passenger revenue growth of
10% and new acquisitions offset by reduced government funding, inflation and
the impact of the extra week in H1 2024 (£1.4m). First Rail adjusted
operating profit decreased by £9.1m reflecting the impact of higher than
accrued final FY 2023 variable fees in the prior year of c.£13m and business
development costs, offset by open access where strong demand and inflationary
fare increases improved profitability. Central costs were £8.2m with the
decrease due to continued efficiencies and a higher proportion of central
costs allocated to the divisions.
The Group's EBITDA adjusted for First Rail management fees performance measure
were lower year-on-year driven mostly by the FY23 management fee recognised in
First Rail in the prior year.
26 weeks to 28 September 2024 27 weeks to 30 September 2023 53 weeks to 30 March 2024
£m £m £m
First Bus EBITDA 1 63.9 61.4 132.5
Attributable net income from First Rail DfT contracted TOCs 2 14.0 23.2 39.5
First Rail – open access and Additional Services EBITDA 1 22.6 22.2 37.6
Group central costs (EBITDA basis 1 ) (8.0) (12.0) (21.8)
Group EBITDA adjusted for First Rail DfT contracted TOCs’ management fees 92.5 94.8 187.8
1 Pre-IFRS 16 basis.
2 A reconciliation to the segmental disclosures is set out in note 3.
Adjusted earnings were £51.8m (H1 2024: £56.5m), driven by strong adjusted
operating profit performance across the business, offset by the lower net
attributable management fees at the DfT TOCs.
26 weeks to 28 September 2024 27 weeks to 30 September 2023 53 weeks to 30 March 2024
£m £m £m
First Bus adjusted operating profit 41.1 36.0 83.6
First Rail adjusted operating profit 67.9 77.0 143.3
Group central costs (operating profit basis) (8.2) (12.4) (22.6)
Group adjusted operating profit 100.8 100.6 204.3
Interest (30.0) (27.1) (65.3)
Profit before tax 70.8 73.5 139.0
IFRS 16 DfT contracted TOCs adjustment 1.3 5.3 10.2
Taxation (17.8) (18.4) (32.0)
Non-controlling interest (2.5) (3.9) (6.5)
Group adjusted earnings 51.8 56.5 110.7
Reconciliation to non-GAAP measures and performance
Note 3 to the financial statements sets out the reconciliations of operating
profit and profit before tax to their adjusted equivalents.
The principal adjusting items in H1 2025 are as follows:
Greyhound Canada
A net £0.5m charge was incurred in the period relating to the continued
winding down of Greyhound Canada operations.
The principal adjusting items in relation to the operating profit adjustments
- discontinued operations were as follows:
CARES receipt
A credit of £0.4m was recognised in the period on receipt of CARES funding in
relation to the discontinued North American operations.
Legacy US pensions scheme buy out
On 16 July 2024, the Group agreed terms with an insurance company to buy out
the remaining liabilities of the legacy Greyhound US pension plan, with the
plan being terminated thereafter. Following a Group contribution of $6m, gross
liabilities valued at $155m (£123m) at the FY 2024 year-end were removed from
the Group's balance sheet and the Group recognised a net settlement gain after
related costs of £5.5m in the income statement as an adjusting item.
The principal adjusting items in H1 2024 were as follows:
First Bus pension settlement charge and related items
In September 2023, First Bus concluded a period of consultation with regards
to its two Local Government Pension Funds and subsequently terminated its
participation in these funds on 31 October 2023, with affected employees
enrolled into the First Bus Retirement Savings Plan. Adjusting charges of
£142.3m were recognised in the prior period for the settlement charge and
related termination costs. A gain of £160.4m was recognised in Other
comprehensive income in relation to the restricted accounting surplus.
Adjusting items – discontinued operations
An initial payment of the First Transit earnout consideration of $62.8m
(£48.9m) was received during the first half of the prior year. At that time,
an adjusting credit of £2.3m arose as a result of the hedging of the cash
receipt and the retranslation of the US dollar asset into pounds sterling.
Group statutory operating profit
Statutory operating profit (continuing basis) was £100.3m (H1 2024: loss of
£(41.4)m reflecting the First Bus pension settlement charge and related
costs).
Finance costs and investment income
Net finance costs were £30.0m (H1 2024: £27.1m) with the increase
principally due to additional PCV finance leases, lower interest receivable on
deposits and lower IFRS 16 interest charge in the DfT TOCs.
Profit before tax
Statutory profit before tax (continuing basis) was £70.3m (H1 2024: loss of
£(68.5)m). Adjusted profit before tax (continuing basis) as set out in note 3
to the financial statements was £70.8m (H1 2024: £73.5m). Adjusting items
(continuing basis) were a charge of £0.5m, relating to the continued winding
down of Greyhound Canada operations. (H1 2024: charge of £142.0m, primarily
reflecting the First Bus pension settlement charge and related costs).
Tax
The tax charge on adjusted profit before tax on continuing operations was
£17.8m (H1 2024: £18.4m), representing an effective tax rate of 25.1% (H1
2024: 25.0%). The effective rate remains broadly in line with the UK rate.
There was no tax relating to adjusting items (H1 2024: credit of £35.6m). The
total tax charge, including tax on discontinued operations, was £17.8m (H1
2024: credit of £(17.2)m). The actual tax paid during the period was £0.8m
(H1 2024: £1.5m).
The ongoing Group's effective tax rate is expected to be broadly in line with
UK corporation tax levels (currently 25%).
EPS
Adjusted continuing EPS was 8.5p (H1 2024: 8.1p). Basic continuing EPS was
8.2p (H1 2024: (7.9)p).
Shares in issue
As at 28 September 2024 there were 598.6m shares in issue (H1 2024: 662.5m),
excluding treasury shares and own shares held in trust for employees of 152.1m
(H1 2024: 88.2m). The Company’s £115m share buyback programme completed on
5 August 2024 having repurchased 71,200,278 shares. 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
608.5m (H1 2024: 697.7m).
Capital allocation framework
The Group's capital allocation framework can be summarised as follows:
Investment • First Bus: £125m net cash capex for FY 2025, mostly on electrification • First Rail: continues to be cash capital-light, with any capital expenditure required by the management fee-based operations fully funded under the new contracts and open access rolling stock operating leases in line with the track access agreements
Growth • Actively reviewing adjacent organic and inorganic opportunities where this creates value for shareholders and exceeds the Group’s pre-tax WACC (c.10%)
Returns for shareholders • Progressive dividend policy currently around 3x cover of Group adjusted earnings; paid c.1/3 interim and 2/3 final dividend • Interim dividend of 1.7p per share declared • Additional £50m buyback announced • The Board remains committed to returning surplus cash to shareholders
Balance sheet • Less than 2.0x Adjusted Net Debt: rail management fee-adjusted EBITDA target in the medium term
Dividend
The Board has declared an interim dividend of 1.7p per share (c.£10m in
aggregate), to be paid on 31 December 2024 to shareholders on the register at
29 November 2024.
Adjusted cash flow
The Group's adjusted cash outflow of £(7.8)m (H1 2024: outflow of £(108.0)m)
in the period reflects strong underlying cash generated by operations offset
by capital outflows relating to investment in First Bus, the impact of the
share buyback programmes, lease payments and movement in First Rail
ring-fenced cash (£25.3m outflow since FY 2024). The adjusted cash flow is
set out below:
26 weeks to 28 September 2024 27 weeks to 30 September 2023 53 weeks to 30 March 2024
£m £m £m
Adjusted EBITDA 362.0 342.3 748.6
Other non-cash income statement charges 6.4 (134.3) 13.7
Working capital 19.1 (74.9) (117.0)
Movement in other provisions (31.3) (18.8) (30.2)
Movement in financial assets/contingent consideration receivable (1.0) 26.0 23.7
Settlement of foreign exchange hedge - (1.1) (1.1)
Pension payments lower than income statement charge (4.7) 113.1 (9.3)
Cash generated by operations 350.5 252.3 626.6
Capital expenditure and acquisitions (74.0) (115.6) (236.0)
Proceeds from disposal of property, plant and equipment 10.1 17.2 42.8
Proceeds from capital grant funding 23.8 55.3 94.8
Proceeds from contingent consideration - 48.9 65.3
Interest and tax (31.6) (31.4) (67.6)
Shares purchased for Employee Benefit Trust (9.3) (6.1) (16.5)
Share repurchases from buyback programmes, including costs (41.4) (66.6) (117.6)
External dividends paid (24.0) (19.7) (29.5)
Dividends paid to non-controlling interests - - (6.5)
Settlement of foreign exchange hedge - 4.2 4.1
Lease payments now in debt (211.9) (246.5) (526.2)
Fees for finance facilities - - (1.4)
Adjusted cash flow (7.8) (108.0) (167.7)
Foreign exchange movements 1.5 0.8 3.4
Net inception of leases (37.9) (14.8) (237.5)
Lease payments in debt 211.9 246.5 526.2
Other non-cash movements - - (0.1)
Movement in net debt in the period 167.7 124.5 124.3
Capital expenditure
Non-First Rail cash capital expenditure was £60.1m, which related to First
Bus and Group items (H1 2024: £95.2m). First Rail cash capital expenditure
was £12.4m (H1 2024: £20.4m) and is typically matched by receipts from the
DfT under current contractual arrangements or other funding.
During the period leases in the non-First Rail divisions were entered into
with capital values in First Bus of £9.2m and Group items of £0.7m (H1 2024:
Bus £5.5m and Group items £1.3m). First Rail entered into leases with a
capital value of £21.8m (H1 2024: £9.0m). During the period asset backed
financial liabilities were entered into in First Bus of £35.1m (H1 2024:
£nil).
Non-First Rail gross capital investment (fixed asset and software additions,
plus the capital value of new leases) was £53.1m and comprised First Bus
£52.4m and Group items £0.7m (H1 2024: £88.8m, comprising First Bus
£88.7m, Group items £0.1m). First Rail gross capital investment was £35.8m
(H1 2024: £35.2m). 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 period.
Funding
As at the period end, the Group had £532.7m of undrawn committed headroom and
free cash (FY 2024: £705.2m), being £300.0m (FY 2024: £300.0m) of committed
undrawn headroom on the RCF, £97.7m (FY 2024: £129.8m) committed undrawn
headroom on the Green Hire Purchase facility, £42.2m (FY 2024: £54.9m)
committed undrawn headroom on the NextGen battery finance facility and £92.8m
(FY 2024: £220.5m) of net free cash after offsetting overdraft positions.
Net debt/(cash)
As at 28 September 2024 the Group’s adjusted net debt, which excludes IFRS
16 lease liabilities and ring-fenced cash, was £0.2m (FY 2024: adjusted net
cash of £(64.1)m). Reported net debt was £977.1m (FY 2024: £1,144.8m) after
IFRS 16 and including ring-fenced cash of £(274.9)m (FY 2024: £(249.6)m), as
follows:
Analysis of net debt 28 September 2024 30 September 30 March 2024
£m 2023 £m
£m
Sterling bond (2024) - 172.0 96.2
Bank loans and overdrafts 70.6 96.4 27.8
Lease liabilities 1,251.8 1,529.0 1,458.5
Asset backed financial liabilities 72.1 32.1 45.6
NextGen (Hitachi JV) facility 19.4 - 13.2
Loan notes - 0.6 -
Gross debt excluding accrued interest 1,413.9 1,830.1 1,641.3
Cash (161.9) (378.2) (246.9)
First Rail ring-fenced cash and deposits (271.2) (303.2) (245.6)
Other ring-fenced cash and deposits (3.7) (4.1) (4.0)
Net debt excluding accrued interest 977.1 1,144.6 1,144.8
IFRS 16 lease liabilities – rail 1,198.7 1,492.2 1,408.9
IFRS 16 lease liabilities – non-rail 53.1 36.8 49.6
IFRS 16 lease liabilities – total 1,251.8 1,529.0 1,458.5
Net cash excluding accrued interest (pre-IFRS 16) (274.7) (384.4) (313.7)
Adjusted net debt/(cash) (pre-IFRS 16 and excluding ring-fenced cash) 0.2 (77.1) (64.1)
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. The
ring-fenced cash represents that which is not available for distribution or
the amount required to satisfy the liquidity ratios at the balance sheet date.
Interest rate risk
Exposure to floating interest rates is managed to ensure that at least 50%
(but at no time more than 100%) of the Group's pre-IFRS 16 gross debt is fixed
rate for the medium term.
Fuel and electricity price risk
We use a progressive forward hedging programme to manage commodity risk. As at
November 2024, 86% of our ‘at risk’ UK crude requirements for H2 2025
(38.4m litres, which is all in First Bus) was hedged at an average rate of
48.7p per litre, 62% of our requirements for the year to the end of March 2026
at 49.3p per litre, and 25% of our requirements for the year to the end of
March 2027 at 45.7p per litre. We also have an electricity hedge programme in
place, with 78% of our consumption (based on current consumption forecasts)
hedged for H2 2025 at £137/MWh, 68% for FY 2026 at £73/MWh and 33% for FY
2027 at £70/MWh.
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 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:
28 September 2024 30 September 2023 30 March 2024
Closing rate Effective rate Closing rate Effective rate Closing rate Effective rate
US Dollar 1.34 1.32 1.22 1.26 1.26 1.26
Canadian Dollar 1.81 1.80 1.66 1.70 1.71 1.77
Pensions
We have updated our pension assumptions for the defined benefit schemes in the
UK and North America. The net pension deficit of £25.3m at the beginning of
the reporting period moved to a net surplus of £32.9m as at 28 September
2024, with the movement principally due to increased discount rate and lower
inflation rate assumptions reducing scheme liabilities, as well as lower
scheme commutation factors. The main factors that influence the balance sheet
position for pensions and the principal sensitivities to their movement at 28
September 2024 are set out below:
Movement Impact
Discount rate -0.1% Decrease surplus by £14m
Inflation +0.1% Decrease surplus by £10m
Life expectancy +1 year Decrease surplus by £48m
Legacy Greyhound pension obligations in the USA have been fully discharged. An
adjusting item gain of £5.5m has been recognised in the income statement.
Following the transfer of the majority of assets and liabilities from The
First UK Bus Pension Scheme to the FirstGroup Pension Scheme in May 2024, the
former Bus Scheme is being wound up. Payment of winding-up lump sums to
eligible members is well under way and winding up is expected to be completed
during 2025.
The FirstGroup Pension Scheme Trustee and the Company are focused on
completing the Scheme’s funding valuation by the statutory deadline of 5
July 2025, which will determine how the £79m from the Limited Partnership
held in escrow is to be distributed between the Scheme and the Company. It is
unlikely that the outcome will be known until shortly before the funds are to
be distributed in July 2025.
Balance sheet
Net assets have increased by £59.6m since 30 March 2024.
Balance sheets – net assets/(liabilities) As at As at As at
28 September 2024 30 September 2023 30 March 2024
£m £m £m
First Bus 658.3 512.4 580.2
First Rail 968.3 1,240.0 1,169.2
Greyhound (retained) (11.4) (24.8) (24.7)
Divisional net assets 1,615.2 1,727.6 1,724.7
Group items 101.6 57.3 60.7
Borrowings and cash (977.1) (1,145.0) (1,148.3)
Taxation (38.5) (6.9) 4.0
Held for sale assets 0.1 0.7 0.6
Total 701.3 633.7 641.7
Post-balance sheet events
On 21 October, the Group announced its acquisition of Anderson Travel, a coach
operator providing contracted school, private hire, mini coach and tour
services in and around London. The acquisition will extend First Bus’
operational footprint and forms part of the Group’s strategy of targeted
acquisitions to grow its share of the UK adjacent services market.
On 25 October, the Group announced its acquisition of Lakeside Group, a
Shropshire and Cheshire-based company that provides school, B2B and B2C
private hire services, with a fleet of around 145 buses and coaches. The
acquisition will grow the Group’s coaching business and offers the potential
to increase our presence in the West Midlands.
Going concern
The Board carried out a review of the Group’s financial projections for the
18 months to 31 March 2026 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 the
foreseeable future. Accordingly, the condensed consolidated financial
statements in the half-yearly report have been prepared on the going concern
basis.
Definitions
Unless otherwise stated, all financial figures for the 26 weeks to 28
September 2024 (the 'first half', the 'period' or 'H1 2025') include the
results and financial position of the First Rail business for the period ended
14 September 2024 and the results of all other businesses for the 26 weeks
ended 28 September 2024. The figures for the 27 weeks to 30 September 2023
(the 'prior period' or 'H1 2024') include the results and financial position
of the First Rail business for the period ended 16 September 2023 and the
results of all other businesses for the 27 weeks ended 30 September 2023.
Figures for the 53 weeks to 30 March 2024 ('FY 2024') include the results and
financial position of the First Rail business for the year ended 31 March 2024
and the results of all other businesses for the 53 weeks ended 30 March 2024.
'Cont.' or the 'Continuing operations' refer to First Bus, First Rail, Group
items and Greyhound Canada.
'Disc.' or the 'Discontinued operations' refer to First Student, First Transit
and Greyhound US.
References to 'adjusted operating profit', 'adjusted profit before tax',
‘adjusted earnings’ and 'adjusted EPS' throughout this document are before
the adjusting items as set out in note 3 to the financial statements, and in
the case of ‘adjusted earnings’ and ‘adjusted EPS’, excluding the
impact of IFRS 16 for the Group’s management fee-based Rail operations.
‘Adjusted revenue’ is revenue excluding that element of DfT TOC revenue,
and related intercompany eliminations, where the Group takes substantially no
revenue risk. The Adjusted revenue measure includes management and performance
fee income earned by the Group from its DfT TOC contracts.
'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 on a pre-IFRS 16
basis, plus First Rail attributable net income from management fee-based
operations, minus central costs.
‘Adjusted earnings' is the Group’s statutory profit for the period
attributable to equity holders of the parent, excluding adjusting items as
detailed in note 3, and also excluding the impact of IFRS 16 for the Group’s
management fee-based Rail operations.
'Net debt/(cash)' is the value of Group external borrowings, excluding accrued
interest, less cash balances.
'Adjusted net debt/(cash)' excludes ring-fenced cash and IFRS 16 lease
liabilities from net debt/(cash).
References to ‘underlying' adjust for the impact of the additional week in
H1 2024 and the transfer of First Bus operations in Oldham to TfGM
franchising.
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.
Principal risks and uncertainties
The Board has conducted a thorough assessment of the principal risks and
uncertainties facing the Group for the remainder of the financial year,
including those that would threaten the successful and timely delivery of its
strategic priorities, future performance solvency and liquidity.
There are a number of risks and uncertainties facing the Group in the
remaining six months of the financial year in addition to those mentioned in
the Business and Financial Reviews. The underlying principal risks and
uncertainties in our operating businesses remain broadly consistent with those
set out in detail on pages 86 to 95 of the Annual Report and Accounts 2024,
with “Human Resources” re-termed “People” and “Contracted
Business” and “Growth within the Sector” changed to “Growth and
Diversification”, aligning strategic principal risks with the Group’s four
strategic pillars.
Several of the principal risks remain more elevated currently given the wider
geopolitical and related economic backdrop. The Principal Risks are:
• Economic conditions
• Geopolitical
• Climate change
• Growth and Diversification
• Financial resources
• Safety
• Pension scheme funding
• Regulatory compliance
• Information Security, including Cyber-security
• People
Risks that are of particular focus to monitor in the second half of the year
and going forwards include the anticipated changes in the UK bus and rail
sectors as a result of the Government’s announced transport policies, and
developments in the wider geopolitical backdrop which may affect the UK
economy.
For a full summary of the Principal Risks and Uncertainties facing the Group,
please refer to the Annual Report and Accounts 2024 at Annual Report 2024 –
FirstGroup plc
(https://www.firstgroupplc.com/investors/annual-report-2024.aspx)
annual-report-2024.pdf (firstgroupplc.com)
(https://www.firstgroupplc.com/~/media/Files/F/Firstgroup-Plc/reports-and-presentations/reports/annual-report-2024.pdf)
Graham Sutherland Ryan Mangold
Chief Executive Officer Chief Financial Officer
14 November 2024 14 November 2024
Condensed consolidated income statement
Notes Unaudited Unaudited
26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Revenue 2, 4 2,344.1 2,207.0
Operating costs before LGPS pension settlement and related charges (2,243.8) (2,106.1)
LGPS pension settlement and related charges - (142.3)
Total operating costs (2,243.8) (2,248.4)
Operating profit/(loss) 100.3 (41.4)
Investment income 5 4.7 11.0
Finance costs 5 (34.7) (38.1)
Profit/(loss) before tax 70.3 (68.5)
Tax 6 (17.8) 17.2
Profit/(loss) from continuing operations 52.5 (51.3)
Profit from discontinued operations 4 5.8 0.1
Profit/(loss) for the period 58.3 (51.2)
Attributable to:
Equity holders of the parent 55.8 (55.1)
Non-controlling interests 2.5 3.9
58.3 (51.2)
Earnings per share
Earnings per share for profit/(loss) from continuing operations attributable to the ordinary equity holders of the company
Basic 8.2p (7.9)p
Diluted 7.8p (7.9)p
Earnings per share for profit/(loss) attributable to the ordinary equity holders of the company
Basic 7 9.2p (7.9)p
Diluted 7 8.8p (7.9)p
Adjusted results (from continuing operations) 1
Adjusted operating profit 3 100.8 100.6
Adjusted profit before tax 70.8 73.5
Adjusted EPS 7 8.5p 8.1p
Adjusted diluted EPS 8.1p 7.5p
1 Adjusted for certain items as set out in note 3 and note 7.
The accompanying notes form an integral part of this consolidated income
statement.
Condensed consolidated statement of comprehensive income
Unaudited Unaudited
26 weeks to 27 weeks to 30 September 2023
28 September £m
2024
£m
Profit/(loss) for the period 58.3 (51.2)
Items that will not be reclassified subsequently to profit or loss
Actuarial gains/(losses) on defined benefit pension schemes 43.0 (70.7)
Gain on termination of LGPS participation from restricted accounting surplus - 160.4
Deferred tax on actuarial losses on defined benefit pension schemes (10.2) (22.3)
32.8 67.4
Items that may be reclassified subsequently to profit or loss
Hedging instrument movements (7.2) 11.2
Deferred tax on hedging instrument movements 1.8 (2.2)
Cumulative profit on hedging instruments reclassified to the income statement - (2.9)
Exchange differences on translation of foreign operations – continuing operations (1.8) (0.6)
Exchange differences on translation of foreign operations – discontinued operations 2.2 (1.9)
(5.0) 3.6
Other comprehensive income for the period 27.8 71.0
Total comprehensive income for the period 86.1 19.8
Attributable to:
Equity holders of the parent 83.6 15.9
Non-controlling interests 2.5 3.9
86.1 19.8
Total comprehensive income/(loss) for the period attributable to owners of FirstGroup plc arises from:
Continuing operations 77.5 24.5
Discontinued operations 8.6 (4.7)
86.1 19.8
The accompanying notes form an integral part of this consolidated statement of
comprehensive income.
Condensed consolidated balance sheet
Note Unaudited Audited 30 March 2024 £m
28 September 2024
£m
Non-current assets
Goodwill 8 112.5 111.0
Other intangible assets 8.8 10.4
Property, plant and equipment 9 1,956.5 2,155.4
Deferred tax assets 13.4 39.6
Retirement benefit assets 18 35.7 6.4
Derivative financial instruments 13 - 0.4
Financial asset 13 101.9 99.6
Investments 2.9 2.6
2,231.7 2,425.4
Current assets
Inventories 29.0 25.9
Trade and other receivables 10 837.9 852.6
Current tax assets 4.1 4.4
Cash and cash equivalents 17 436.8 496.5
Derivative financial instruments 13 - 2.0
1,307.8 1,381.4
Assets held for sale 0.1 0.6
Total assets 3,539.6 3,807.4
Current liabilities
Trade and other payables 1,198.7 1,258.6
Tax liabilities – Current tax liabilities 0.1 0.4
– Other tax and social security 55.9 39.6
Borrowings 11 548.2 626.5
Derivative financial instruments 13 6.1 3.4
Provisions 14 64.9 74.6
Current liabilities 1,873.9 2,003.1
Net current liabilities (566.1) (621.7)
Non-current liabilities
Borrowings 11 865.7 1,018.3
Retirement benefit liabilities 18 2.8 31.7
Derivative financial instruments 13 2.4 1.3
Provisions 14 93.5 111.3
964.4 1,162.6
Total liabilities 2,838.3 3,165.7
Net assets 701.3 641.7
Equity
Share capital 15 37.5 37.5
Share premium 693.3 693.3
Hedging reserve (6.0) (1.8)
Other reserves 22.4 22.4
Own shares (26.4) (20.4)
Translation reserve (22.5) (22.9)
Retained earnings (7.9) (74.8)
Equity attributable to equity holders of the parent 690.4 633.3
Non-controlling interests 10.9 8.4
Total equity 701.3 641.7
The accompanying notes form an integral part of this consolidated balance
sheet.
COndensed consolidated statement of changes in equity
Share capital Share premium Hedging reserve Other reserves Own shares Translation reserve Retained earnings Total Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m £m
Balance at 30 March 2024 37.5 693.3 (1.8) 22.4 (20.4) (22.9) (74.8) 633.3 8.4 641.7
Profit for the period - - - - - - 55.8 55.8 2.5 58.3
Other comprehensive income/(loss) for the period - - (5.4) - - 0.4 32.8 27.8 - 27.8
Total comprehensive income/(loss) for the period - - (5.4) - - 0.4 88.6 83.6 2.5 86.1
Derivative hedging instrument movements transferred to balance sheet (net of tax) - - 1.2 - - - - 1.2 - 1.2
Transactions with owners in their capacity as owners
Movement in EBT and treasury shares - - - - (6.0) - (3.2) (9.2) - (9.2)
Share-based payments - - - - - - 6.0 6.0 - 6.0
Deferred tax on share-based payments - - - - - - (0.5) (0.5) - (0.5)
Dividends paid - - - - - - (24.0) (24.0) - (24.0)
Balance at 28 September 2024 (unaudited) 37.5 693.3 (6.0) 22.4 (26.4) (22.5) (7.9) 690.4 10.9 701.3
Balance at 25 March 2023 37.5 693.2 (0.7) 22.4 (15.4) (16.3) 19.5 740.2 10.6 750.8
(Loss)/profit for the period - - - - - - (55.1) (55.1) 3.9 (51.2)
Other comprehensive income/(loss) for the period - - 6.1 - - (2.5) 67.4 71.0 - 71.0
Total comprehensive income/(loss) for the period - - 6.1 - - (2.5) 12.3 15.9 3.9 19.8
Hedging instrument movements transferred to balance sheet (net of tax) - - (1.5) - - - - (1.5) - (1.5)
Transactions with owners in their capacity as owners
Shares issued - 0.1 - - - - - 0.1 - 0.1
Movement in EBT and treasury shares - - - - 4.0 - (10.0) (6.0) - (6.0)
Share-based payments - - - - - - 6.6 6.6 - 6.6
Deferred tax on share-based payments - - - - - - (0.6) (0.6) - (0.6)
Shares bought back but not yet cancelled - - - - - - (22.7) (22.7) - (22.7)
Liability for shares not yet bought back - - - - - - (93.1) (93.1) - (93.1)
Dividends paid - - - - - - (19.7) (19.7) - (19.7)
Balance at 30 September 2023 (unaudited) 37.5 693.3 3.9 22.4 (11.4) (18.8) (107.7) 619.2 14.5 633.7
The accompanying notes form an integral part of this consolidated statement of
changes in equity.
Condensed consolidated cash flow statement
Note Unaudited Unaudited
26 weeks to 28 September 2024 27 weeks to 30 September 2023 £m
£m
Cash generated by operations 350.5 252.3
Tax paid (0.8) (1.5)
Interest paid (35.6) (39.4)
Net cash from operating activities 16 314.1 211.4
Investing activities
Interest received 4.8 9.5
Proceeds from disposal of property, plant and equipment 10.1 17.2
Purchases of property, plant and equipment (71.7) (113.9)
Purchases of software (0.8) (1.7)
Proceeds from capital grant funding 23.8 55.3
Proceeds from contingent consideration - 48.9
Acquisitions of businesses (1.5) -
Settlement of foreign exchange hedge - 4.2
Net cash from investing activities (35.3) 19.5
Financing activities Shares purchased by Employee Benefit Trust (9.3) (6.1)
Treasury shares purchased via share buyback schemes and directly associated costs (41.4) (66.6)
External dividends paid (24.0) (19.7)
Repayment of bond issues (96.2) (12.2)
Repayment of asset backed financial liabilities (5.3) (12.1)
Proceeds from asset backed financial liabilities 31.6 -
Repayment of NextGen facility (3.0) -
Proceeds from NextGen facility 8.1 -
Repayment of lease liabilities (243.3) (234.4)
Net cash flow used in financing activities (382.8) (351.1)
Net decrease in cash and cash equivalents before foreign exchange movements (104.0) (120.2)
Cash and cash equivalents at beginning of period 468.7 708.5
Foreign exchange movements 1.5 0.8
Cash and cash equivalents at the end of the period 366.2 589.1
Cash flow from discontinued operations
Net cash outflow from operating activities (1.2) (3.7)
Net cash inflow from investing activities - 53.1
Net cashflow from financing activities - -
Net cash flow from discontinued operations (1.2) 49.4
Cash and cash equivalents are included within current assets on the
consolidated balance sheet. Cash and cash equivalents includes ring-fenced
cash of £274.9m in H1 2025 (full year 2024: £249.6m). The most significant
ring-fenced cash balances are held by the Group’s First Rail subsidiaries.
All non-distributable cash in franchised Rail subsidiaries is considered
ring-fenced under the terms of the National Rail Contracts.
Reconciliation to cash flow statement Note Unaudited Audited 30 March 2024 £m
28 September 2024
£m
Cash and cash equivalents – balance sheet 17 436.8 496.5
Bank overdraft 17 (70.6) (27.8)
Balances per consolidated cash flow statement 366.2 468.7
Note to the condensed consolidated cash flow statement – reconciliation of
net cash flow to movement in net debt
Note Unaudited Unaudited
26 weeks to 28 September 2024 27 weeks to 30 September 2023 £m
£m
Net decrease in cash and cash equivalents in period (104.0) (120.2)
Decrease in debt excluding leases 90.0 12.2
Adjusted cash flow (14.0) (108.0)
Repayment of lease liabilities and asset backed financial liabilities 248.6 246.5
Inception of leases and asset backed financial liabilities (68.4) (14.8)
Foreign exchange movements 1.5 0.8
Other non-cash movements - -
Movement in net debt in period 167.7 124.5
Net debt at beginning of period (1,144.8) (1,269.1)
Net debt at end of period 17 (977.1) (1,144.6)
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.
The accompanying notes form an integral part of this consolidated cash flow
statement.
Notes to the CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1 Basis of preparation
The half yearly results for the 26 weeks to 28 September 2024 include the
results and financial position of the First Rail division for the period ended
14 September 2024 and the results and financial position for the other
divisions for the 26 weeks ended 28 September 2024. The comparative figures
for the 27 weeks to 30 September 2023 include the results of the First Rail
division for the period ended 16 September 2023 and the results of the other
divisions for the 27 weeks ended 30 September 2023. The comparative figures
for the 53 weeks ended 30 March 2024 include the financial position of the
First Rail division at 31 March 2024 and the financial position of the other
divisions at 30 March 2024.
These half yearly results do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the
year ended 30 March 2024 were approved by the board of directors on 11 June
2024 and delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of the Companies
Act 2006.
These condensed consolidated interim financial statements for the half year
reporting period for the 26 weeks to 28 September 2024 have been prepared in
accordance with the UK-adopted International Accounting Standard 34 Interim
Financial Reporting and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom’s Financial Conduct Authority.
The interim condensed consolidated interim financial statements do not include
all of the notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the annual report
for the year ended 30 March 2024, and any public announcements made by
FirstGroup plc during the interim reporting period.
The accounting policies applied are consistent with those described in the
Group’s latest annual audited financial statements, except for income tax
which at the interim is based on applying expected full year effective tax
rates to the interim results. There has been no material change as a result of
applying these amendments. We have also included certain non-GAAP measures in
order to reflect management’s reported view of financial performance
excluding certain other items.
These results are unaudited but have been reviewed by the auditor. The
comparative figures for the 27 weeks to 30 September 2023 are unaudited and
are derived from the condensed consolidated interim financial statements for
that period, which was also reviewed by the auditor.
Going concern – basis of preparation
The Directors have carried out a review of the Group’s financial projections
for the 18 months to 31 March 2026, with due regard for the risks and
uncertainties to which the Group is exposed, the uncertain economic climate
and the impact that this could have on trading performance. The review also
considered the Group’s net current liabilities position at 28 September
2024. Based on this review, the Directors believe that the Company and the
Group have adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the half yearly results have been prepared on
the going concern basis in preparing this report.
Evaluation of going concern
The Board evaluated whether it was appropriate to prepare the half yearly
results in this report on a going concern basis and in doing so considered
whether any material uncertainties exist that cast doubt on the Group’s and
the Company’s ability to continue as a going concern over the going concern
period.
Consistent with prior years, the Board’s going concern assessment is based
on a review of future trading projections, including whether banking covenants
are likely to be met and whether there is sufficient committed facility
headroom to accommodate future cash flows for the going concern period.
Divisional management teams prepared detailed, bottom-up projections for their
businesses reflecting the impact of the macroeconomic considerations on the
operating environment, assumptions on passenger volumes and government
support, and the potential impact of the policy changes which may arise with
the new UK government. Projections also considered the impact of actions
required to address the Group’s climate-related targets and ambitions, and
also took into account the risks and uncertainties to which the Group is
exposed.
Base case scenario
These projections were the subject of a series of executive management reviews
and were used to update the base case scenario that was used for the purposes
of the going concern assessment at the 2024 year end. The base case assumes a
continuing recovery in passenger volumes and yields in FY 2025, with some
offset from a reduction in direct government funding. The base case assumes
the three TOC rail contracts run to their earliest expiry date (South Western
Railway in May 2025, Great Western Railway in June 2025, West Coast
Partnership in October 2026). The macro projections in the updated base case
assume that the UK operates in a low-growth, cautiously recovering economy.
The projections also capture the expected financial impact of the actions
required to support the Group’s climate-related targets and ambitions, and
the cash flow impact of other capital allocation decisions which the Group may
consider.
1 Basis of preparation (continued)
Severe, plausible downside scenario
In addition, a severe but plausible downside case was also modelled which
assumes a more adverse macroeconomic recovery profile. In First Bus the severe
but plausible downside case assumes a reduction in passenger volumes driving a
25% reduction in Bus profitability, as well as the impact of other unexpected
cost inflation. In First Rail, the downside case assumes reduced TOC
performance fee awards and lower revenues in Hull Trains and Lumo open access.
The downside case also considered potential downsides of a significant
climate-related event or unbudgeted decarbonisation costs, as well as the risk
of one-off safety, regulatory non-compliance or technology events.
Mitigating actions
If the future operating environment of the Group were to be more challenging
than assumed in the base case or downside case scenarios, the Group would
reduce and defer planned growth capital expenditure and further reduce costs
in line with a lower-volume operating environment, to the extent that the
essential services we operate in First Bus are not required to be run for the
governments and communities we support.
Going concern statement
Based on the scenario modelling undertaken, and the potential mitigating
actions referred to above, the Board is satisfied that the Group’s liquidity
and covenant headroom over the going concern period is sufficient for the
business needs.
Operating and financial review
The operating and financial review considers the impact of seasonality on the
Group and also the principal risks and uncertainties facing it in the
remaining six months of the financial year.
Summary of significant events in the Group
Significant events in relation to the change in the financial position and
performance of the Group:
Following the UK general election in July, the rail and bus industries in the
UK are set to see considerable change over the next few years, with the
National Rail Contracts set to move to public ownership, and a number of
regions outside London planning to adopt the franchising model in Bus.
In First Rail, adjusted operating profit was lower than the prior year, with
H1 2024 benefiting from a £13m uplift as a result of FY 2023 variable fees
for DfT TOCs having been agreed.
First Rail’s open access operations Lumo and Hull Trains delivered further
growth in adjusted operating profit due to robust passenger volumes and
effective yield management, which helped offset slightly higher costs.
In the First Bus division, first half performance benefited from higher
passenger volumes and revenue per mile, which offset a reduction in government
funding. The prior year included a week of extra trading as well as the
operation of the Oldham depot in Manchester.
On 28 June 2024, the Group successfully took over the operation of the IFS
Cloud London Cable Car on behalf of Transport for London (`TfL'). The contract
has an initial core five-year term with the option to extend for a further
three years, with anticipated revenues of c.£60m over the eight-year period.
In August, the Group acquired Grand Union Trains Wcml Holdings Limited, which
owns the track access rights granted by the ORR to run a new open access rail
service on the West Coast Mainline from London Euston to Stirling.
In September, the Group’s 6.875% bond matured and was repaid from the
Group’s existing financial resources. The Group continues to make use of its
Green Hire Purchase Facility and NextGen Battery Facility to support Bus
electrification.
The Group has a £300m sustainability-linked Revolving Credit Facility
(‘RCF’) with a group of its relationship banks. This committed RCF remains
undrawn and matures in August 2026.
The Company’s £115m share buyback programme completed on 5 August 2024
having repurchased 71,200,278 shares.
On 16 July 2024, the Group agreed terms with an insurance company to buy out
the remaining liabilities of the legacy Greyhound US pension plan, with the
plan being terminated thereafter. Following a Group contribution of $6m, gross
liabilities valued at $155m (£123m) at the FY 2024 year-end were removed from
the Group's balance sheet and the Group recognised a net settlement gain after
related costs of £5.5m in the income statement as an adjusting item.
Key sources of estimation uncertainty and significant accounting judgements
The preparation of these half yearly results requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Although these estimates are based on management’s best
knowledge, actual results may ultimately differ from those estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
In preparing these half yearly results, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the consolidated
financial statements for the year ended 30 March 2024.
This half yearly report has been prepared in respect of the Group as a whole
and accordingly matters identified as being significant or material are so
identified in the context of FirstGroup plc and its subsidiary undertakings
taken as a whole.
These condensed consolidated interim financial statements were approved by the
Board on 14 November 2024.
2 Revenue
Passenger revenue in First Bus was £385.8m (H1 2024: £377.1m) with the
increase mainly due to higher passenger volumes and increased revenue per
mile. First Rail passenger revenue was £1,512.8m (H1 2024: £1,405.6m).
The principal direct fiscal support recognised during the period comprised
£13.9m (H1 2024: £24.5m) of funding and concessions in First Bus. These are
recognised within revenue in accordance with IFRS 15 (as per our policy on
revenue recognition in the 2024 Annual Accounts), when control of the good or
service is transferred to the customer and the Group is entitled to the
consideration.
The main direct fiscal support recognised in revenue over time for each
division has been as follows:
First Bus: The English, Scottish and Welsh Governments have each supported bus
operators, through a variety of funding schemes since March 2020. In England
the BSOG+ scheme provides funding through enhanced BSOG rates per litre and an
additional payment per km operated for eligible miles. In addition to this the
DfT implemented a £2 cap on all single fares across the country in January
2023 and is currently reimbursing operators for any revenue foregone as a
result of the reduced ticket prices. The scheme will run to December 2024,
whereupon the fare cap will increase to £3. In Scotland, funding is provided
by the NSG scheme which replaced their BSOG scheme. In Wales funding is
provided through BSSG and the tendering of routes which are no longer
commercially viable.
First Rail: The Emergency Measures Agreements (EMAs), the Emergency Recovery
Measures Agreement (ERMAs) and the National Rail Contracts (NRCs) transferred
substantially all revenue and cost risk to the government and for the current
year and prior year periods, our First Rail franchises were operated under the
terms of these arrangements.
- GWR operated under an NRC, with a core period to June 2025
and an option for the DfT to extend by a further three years to June 2028
- WCP/Avanti were awarded a nine-year NRC in September 2023,
with a minimum core three-year term to October 2026
- SWR operated under an NRC throughout both periods, with an
expiry date of May 2025
- On 11 May 2023 the DfT confirmed that it would not
exercise its option to extend FirstGroup’s TPE NRC, and the contract expired
on 28 May 2023. On that date the DfT appointed its Operator of Last Resort to
take over delivery of passenger services on the TPE network
Under the arrangements, our franchised TOCs are paid a fixed management fee to
continue to operate the rail network at a service level agreed with the
government. Performance based fees are earned through a combination of
scorecards and quantified target methodologies benchmarked off this agreed
service level. Net DfT funding including the management and performance fee is
recognised as revenue in Rail franchise subsidy receipts, in line with the
revenue recognition policy for franchise subsidy receipts from the DfT.
Disaggregated revenue by operating segment is set out in note 4.
3 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
by management in order to eliminate factors which distort year-on-year
comparisons, and to enable the like-for-like monitoring of the Group’s
recurring operations over time. The Group’s adjusted performance is used to
explain year-on-year changes when the effect of certain items is significant,
including strategic items (including material M&A and group restructuring
projects), costs of acquisitions including aborted acquisitions, and
impairment of assets. Other items below £5.0m would not normally be
considered as adjusting items unless part of a larger strategic project, but
items which distort year-on-year comparisons that exceed this amount could
potentially be classified as an adjusting item and are assessed on a
case-by-case basis. Such potential adjusting other items include:
restructuring and reorganisation costs; property gains or losses; aged legal
and self-insurance claims; movements on insurance discount rates; onerous
contract provisions; pension settlement gains or losses; and other items which
management has determined as not being relevant to an understanding of the
Group’s underlying business performance. Subsequent remeasurements of
adjusting items are also recognised as an adjusting item in the future period
in which the remeasurement occurs.
In light of the recently-announced government policy to take National Rail
Contracts back into public ownership and the potential future impact on the
Group’s statutory revenue, the Group has identified Adjusted revenue as a
new performance measure, to provide an indication of the Group’s revenue
excluding that from NRCs. Adjusted revenue is defined as revenue excluding
that element of DfT TOC revenue, and related intercompany eliminations, where
the Group takes substantially no revenue risk. The Adjusted revenue measure
includes management and performance fee income earned by the Group from its
DfT TOC contracts.
3 Reconciliation to non-GAAP measures and performance (continued)
Reconciliation of operating profit/(loss) to adjusted operating profit on a continuing basis 26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Operating profit/(loss) on a continuing basis 100.3 (41.4)
Adjustments for:
LGPS pension settlement and related charges - 142.3
Greyhound Canada 0.5 (0.3)
Total adjusting operating profit items on a continuing basis 0.5 142.0
Adjusted operating profit on a continuing basis 100.8 100.6
Reconciliation of operating profit to adjusted operating loss on a discontinued basis 26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Operating profit from discontinued operations 5.9 0.1
Adjustments for:
CARES receipt (0.4) -
Legacy US pensions scheme buy out (5.5) -
Transit earnout credit - (2.3)
Total adjusting operating profit items from discontinued operations (5.9) (2.3)
Adjusted operating loss from discontinued operations - (2.2)
Reconciliation of profit/(loss) before tax to adjusted earnings 26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Profit/(loss) before tax (including discontinued operations) 1 76.1 (68.4)
Adjusting operating profit items – continuing operations 0.5 142.0
Adjusting operating profit items – discontinued operations (5.9) (2.3)
Adjusting operating profit items – total operations (5.4) 139.7
Adjusted profit before tax including discontinued operations 70.7 71.3
Rail management fee-based operations – IFRS 16 adjustment 1.3 5.3
Adjusted tax charge (17.8) (18.4)
Non-controlling interests 2 (2.5) (3.9)
Adjusted earnings including discontinued operations 51.7 54.3
1 See note 4.
2 Statutory non-controlling interests principally reflects
Avanti West Coast and South Western Railway.
Adjusting items
The principal adjusting items in relation to the operating profit adjustments
- continuing operations were as follows:
Greyhound Canada
A net £0.5m charge was incurred in the period relating to the continued
winding down of Greyhound Canada operations.
The principal adjusting items in relation to the operating profit adjustments
- discontinued operations were as follows:
CARES receipt
A credit of £0.4m was recognised in the period on receipt of CARES funding in
relation to the discontinued North American operations.
Legacy US pensions scheme buy out
On 16 July 2024, the Group agreed terms with an insurance company to buy out
the remaining liabilities of the legacy Greyhound US pension plan, with the
plan being terminated thereafter. Following a Group contribution of $6m, gross
liabilities valued at $155m (£123m) at the FY 2024 year-end were removed from
the Group's balance sheet and the Group recognised a net settlement gain after
related costs of £5.5m in the income statement as an adjusting item.
3 Reconciliation to non-GAAP measures and performance (continued)
First Bus EBITDA comprises: 26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Pre-IFRS 16 EBITDA 63.9 61.4
IFRS 16 adjustments 1 8.8 7.4
First Bus adjusted EBITDA per segmental results (note 4) 72.7 68.8
First Rail EBITDA comprises:
Non-management fees based TOCs 22.6 22.2
Group’s share of management fee income available for dividends 14.0 23.2
Non-controlling interest 3.0 3.9
Tax at 25% (H1 2024: 25%) 5.7 8.7
IFRS 16 adjustments 1 251.0 228.8
First Rail adjusted EBITDA per segmental results table (note 4) 296.3 286.8
Group items EBITDA comprises:
Pre-IFRS 16 EBITDA (8.0) (12.0)
IFRS 16 adjustments 1 1.0 0.9
Group items adjusted EBITDA per segmental results table (note 4) (7.0) (11.1)
First Rail adjusted operating profit comprises:
Non-management fees based TOCs 22.3 21.6
Group’s share of management fee income available for dividends (net of tax and non-controlling interest) 14.0 23.2
Non-controlling interest 3.0 3.9
Tax at 25% (H1 2024: 25%) 5.7 8.7
IFRS 16 adjustments 1 22.9 19.6
First Rail adjusted operating profit per segmental results table (note 4) 67.9 77.0
Reconciliation of pre-IFRS 16 adjusted operating profit to post-IFRS 16
adjusted operating profit:
Pre-IFRS 16 adjusted EBIT 76.7 80.2
IFRS 16 adjustments 1 24.1 20.4
Post-IFRS 16 adjusted EBIT 100.8 100.6
Reconciliation of statutory revenue to adjusted revenue2:
Revenue – statutory basis 2,344.1 2,207.0
Deduct: DfT TOC revenue (1,774.5) (1,662.1)
Add back: DfT TOC management and performance fees 23.7 34.7
Intercompany eliminations related to DfT TOCs 56.3 55.2
Adjusted revenue 649.6 634.8
Reconciliation of reported net debt to adjusted net debt/(cash): 28 September 2024 30 March 2024
£m £m
Reported net debt 977.1 1,144.8
IFRS 16 lease liabilities (1,251.8) (1,458.5)
Ring-fenced cash 274.9 249.6
Adjusted net debt/(cash) 0.2 (64.1)
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.
2 Adjusted revenue is revenue excluding DfT TOC revenue, and
related intercompany eliminations, where the Group takes substantially no
revenue risk. The Adjusted revenue measure includes management and performance
fee income earned by the Group from its DfT TOC contracts.
4 Business segments information
For management purposes, the Group is organised into three operating divisions
– First Bus, First Rail and Greyhound. Greyhound Canada is categorised as a
Continuing Operation, although trading operations have ceased. 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 26 weeks to 28 September 2024 are as follows:
Continuing Operations Discontinued Operations
First Bus £m First Rail £m Greyhound £m Group Items 1 £m Total £m Greyhound £m Total £m
Passenger revenue 385.8 1,512.8 - - 1,898.6 - 1,898.6
Contract revenue 104.5 - - (12.6) 91.9 - 91.9
Rail franchise subsidy receipts - 211.6 - - 211.6 - 211.6
Other 23.4 118.6 - - 142.0 - 142.0
Revenue 513.7 1,843.0 - (12.6) 2,344.1 - 2,344.1
Rail TOC revenue adjustments - (1,707.0) - 12.5 (1,694.5) - (1,694.5)
Adjusted revenue 2 513.7 136.0 - (0.1) 649.6 - 649.6
Adjusted EBITDA 3 72.7 296.3 - (7.0) 362.0 - 362.0
Depreciation (37.0) (248.6) - (1.0) (286.6) - (286.6)
Software amortisation (0.4) (0.4) - (0.2) (1.0) - (1.0)
Capital grant amortisation 5.8 20.6 - - 26.4 - 26.4
Segment results 41.1 67.9 - (8.2) 100.8 - 100.8
Other adjustments (note 3) - - (0.5) - (0.5) 5.9 5.4
Operating profit/(loss) 41.1 67.9 (0.5) (8.2) 100.3 5.9 106.2
Investment income - 0.1 - 4.6 4.7 0.1 4.8
Finance costs (4.1) (25.1) - (5.5) (34.7) (0.2) (34.9)
Profit/(loss) before tax 37.0 42.9 (0.5) (9.1) 70.3 5.8 76.1
Tax (17.8)
Profit after tax 58.3
1 Group items comprise the elimination of intra-group trading between Bus and
Rail divisions and charges relating to central management and other items.
2 Adjusted revenue is revenue excluding DfT TOC revenue, and related
intercompany eliminations, where the Group takes substantially no revenue
risk.
3 Adjusted EBITDA is adjusted operating profit less capital grant
amortisation plus depreciation plus software amortisation.
Balance sheet at 28 September 2024 Total assets Total liabilities Net assets/(liabilities)
£m £m £m
Greyhound retained 36.0 (47.4) (11.4)
First Bus 923.5 (265.2) 658.3
First Rail 1,982.5 (1,014.2) 968.3
2,942.0 (1,326.8) 1,615.2
Group items 143.2 (41.6) 101.6
Borrowings and cash 436.8 (1,413.9) (977.1)
Taxation 17.5 (56.0) (38.5)
Total 3,539.5 (2,838.3) 701.2
Greyhound (held for sale) 0.1 - 0.1
Grand total 3,539.6 (2,838.3) 701.3
4 Business segments information (continued)
The segment results for the 27 weeks to 30 September 2023 were as follows:
Continuing Operations Discontinued Operations
First Bus £m First Rail £m Greyhound £m Group Items 1 £m Total £m Greyhound £m Group Items 1 £m Total £m
Passenger revenue 377.1 1,405.6 - - 1,782.7 - - 1,782.7
Contract revenue 94.2 - - (19.8) 74.4 - - 74.4
Rail franchise subsidy receipts - 204.9 - - 204.9 - - 204.9
Other 33.6 111.4 - - 145.0 - - 145.0
Revenue 504.9 1,721.9 - (19.8) 2,207.0 - - 2,207.0
Rail TOC revenue adjustments - (1,587.2) - 15.0 (1,572.2) - - (1,572.2)
Adjusted revenue 2 504.9 134.7 - (4.8) 634.8 - - 634.8
Adjusted EBITDA 3 68.8 286.8 - (11.1) 344.5 (1.1) (1.1) 342.3
Depreciation (36.6) (229.2) - (1.0) (266.8) - - (266.8)
Software amortisation (0.7) (1.1) - (0.3) (2.1) - - (2.1)
Capital grant amortisation 4.5 20.5 - - 25.0 - - 25.0
Segment results 36.0 77.0 - (12.4) 100.6 (1.1) (1.1) 98.4
Other adjustments (note 3) (142.3) - 0.3 - (142.0) - 2.3 (139.7)
Operating (loss)/profit (106.3) 77.0 0.3 (12.4) (41.4) (1.1) 1.2 (41.3)
Investment income 1.2 1.3 - 8.5 11.0 - - 11.0
Finance costs (1.3) (28.2) - (8.6) (38.1) - - (38.1)
(Loss)/profit before tax (106.4) 50.1 0.3 (12.5) (68.5) (1.1) 1.2 (68.4)
Tax 17.2
Loss after tax (51.2)
1 Group items comprise the elimination of intra-group trading between Bus and
Rail divisions and charges relating to central management and other items.
2 Adjusted revenue comment is revenue excluding DfT TOC revenue, and
related intercompany eliminations, where the Group takes substantially no
revenue risk.
3 Adjusted EBITDA is adjusted operating profit less capital grant
amortisation plus depreciation plus software amortisation.
Balance sheet at 30 March 2024 Total assets Total liabilities Net assets/(liabilities)
£m £m £m
Greyhound retained 54.2 (78.9) (24.7)
First Bus 895.5 (315.3) 580.2
First Rail 2,164.1 (994.9) 1,169.2
3,113.8 (1,389.1) 1,724.7
Group items 152.5 (91.8) 60.7
Borrowings and cash 496.5 (1,644.8) (1,148.3)
Taxation 44.0 (40.0) 4.0
Total 3,806.8 (3,165.7) 641.1
Greyhound (held for sale) 0.6 - 0.6
Grand total 3,807.4 (3,165.7) 641.7
Segment assets and liabilities are determined by identifying the assets and
liabilities that relate to the business of each segment but excluding
intercompany balances, borrowings and cash and taxation.
5 Investment income and finance costs
26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Investment income
Bank interest receivable (4.7) (9.5)
Interest on pensions (0.1) (1.5)
Total investment income (including discontinued operations) (4.8) (11.0)
Finance costs
Bonds 3.1 6.5
Bank interest and facility fees 5.0 3.2
Finance charges payable in respect of lease liabilities 24.4 27.8
Finance charges payable in respect of asset backed financial liabilities 1.6 0.6
Interest on long-term provisions 0.4 -
Interest on pensions 0.4 -
Total finance costs (including discontinued operations) 34.9 38.1
Total finance costs 34.9 38.1
Investment income (4.8) (11.0)
Net finance costs (including discontinued operations) 30.1 27.1
Investment income relating to discontinued operations was £0.1m (H1 2024:
£nil) and finance costs relating to discontinued operations were £0.2m (H1
2024: £nil).
6 Tax on profit on ordinary activities
26 weeks to 27 weeks to
28 September 2024 30 September 2023
£m £m
Current tax charge 0.9 0.7
Deferred tax charge/(credit) 16.9 (17.9)
Total tax charge/(credit) (including discontinued operations) 17.8 (17.2)
Tax (credit)/charge attributable to:
Profit/(loss) from continuing operations 17.8 (17.2)
Profit from discontinued operations - -
The tax effect of the adjustments disclosed in note 3 was £nil in H1 2024 (H1
2024: credit of £35.6m).
7 Earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to equity
shareholders of £55.8m in H1 2025 (H1 2024: £(55.1)m) by the weighted
average number of ordinary shares in issue of 608.5m (H1 2024: 697.7m). The
number of ordinary shares used for the basic and diluted calculations is 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.
28 September 2024 30 September 2023
number number
m m
Weighted average number of shares used in basic calculation 608.5 697.7
Executive share options 29.0 26.0
Weighted average number of shares used in the diluted calculation 637.5 723.7
7 Earnings per share (EPS) (continued)
The adjusted EPS is intended to highlight the results of the Group before
certain other adjustments as set out in note 3, and before IFRS 16 charges
relating to the Group’s management fee-based Rail operations. A
reconciliation is set out below:
26 weeks to 28 September 2024 27 weeks to 30 September 2023
£m EPS (p) £m EPS (p)
Basic profit/(loss) / EPS 55.8 9.2 (55.1) (7.9)
Management fee-based Rail operations – IFRS 16 adjustments 1.3 0.2 5.3 0.8
Other adjustments (note 3) (5.4) (0.9) 139.7 20.0
Tax effect of other adjustments - - (35.6) (5.1)
Adjusted profit and EPS attributable to the ordinary equity holders of the company 51.7 8.5 54.3 7.8
Add back: Adjusted loss from discontinued operations (0.1) - (2.2) (0.3)
Adjusted profit and EPS from continuing operations 51.8 8.5 56.5 8.1
26 weeks to 27 weeks to
28 September 2024 30 September 2023
pence pence
Diluted EPS 8.8 (7.9)
Adjusted diluted EPS 1 8.1 7.5
1 Adjusted diluted EPS for the prior period reflects the amended definition
of adjusted earnings, where it excludes certain adjustments as set out in note
3, and before IFRS 16 charges relating to the Group’s management fee-based
Rail operations.
8 Goodwill and impairment of assets
£m
Cost
At 31 March 2024 111.0
Additions 1 1.5
At 28 September 2024 112.5
Accumulated impairment losses
At 31 March 2024 -
At 28 September 2024 -
Carrying amount
At 28 September 2024 112.5
At 30 March 2024 111.0
1 Additions of £1.5m relates to goodwill on the acquisition of Grand Union
Trains WCML Holdings Ltd (subsequently renamed as First Rail Stirling Holdings
Ltd) and Grand Union Trains Ltd (subsequently renamed as First Rail Stirling
Ltd).
Disclosures including goodwill by cash generating unit (CGU), details of
impairment testing and sensitivities thereon are set out on page 201 of the
2024 Annual Report.
At 28 September 2024, a review for indicators of impairment was undertaken for
each of the First Bus, Hull Trains and Lumo CGUs. For each of these, it was
concluded that there had been no indicators of impairment since March 2024,
therefore no impairment assessment was performed at 28 September 2024.
9 Property, plant and equipment
Owned assets
Land and Passenger carrying vehicle fleet Other plant and equipment Total
buildings £m £m £m
£m
Cost
At 31 March 2024 235.1 828.3 689.6 1,753.0
Additions 3.8 30.5 31.3 65.6
Transfers to right of use assets - - (8.2) (8.2)
Disposals (1.4) (26.6) (1.4) (29.4)
Reclassifications 1 16.3 - (13.9) 2.4
Foreign exchange movements - (0.3) - (0.3)
At 28 September 2024 253.8 831.9 697.4 1,783.1
Accumulated depreciation and impairment
At 31 March 2024 62.9 426.8 515.2 1,004.9
Charge for period 5.7 26.1 19.2 51.0
Disposals (0.7) (25.5) (1.1) (27.3)
Reclassifications 1 - - 1.6 1.6
Foreign exchange movements - (0.2) - (0.2)
At 28 September 2024 67.9 427.2 534.9 1,030.0
Carrying amount
At 28 September 2024 185.9 404.7 162.5 753.1
At 30 March 2024 172.2 401.5 174.4 748.1
1 As part of the Group’s continuing efforts to streamline reporting
processes, it was identified that £16.3m of assets had been incorrectly
classified between Land and buildings and Other plant and equipment, and
£2.4m had been incorrectly classified between cost and accumulated
depreciation.
Right of use assets
Rolling stock £m Land and Passenger carrying vehicle fleet Other plant and equipment Total
buildings £m £m £m
£m
Cost
At 31 March 2024 3,743.4 65.1 60.4 25.6 3,894.5
Additions and modifications 20.7 1.0 - 0.8 22.5
Transfers from owned assets - - - 9.2 9.2
Disposals (0.2) - - - (0.2)
At 28 September 2024 3,763.9 66.1 60.4 35.6 3,926.0
Accumulated depreciation and impairment
At 31 March 2024 2,395.6 33.2 50.2 8.2 2,487.2
Charge for period 226.1 3.8 3.7 2.0 235.6
Disposals (0.2) - - - (0.2)
At 28 September 2024 2,621.5 37.0 53.9 10.2 2,722.6
Carrying amount
At 28 September 2024 1,142.4 29.1 6.5 25.4 1,203.4
At 30 March 2024 1,347.8 31.9 10.2 17.4 1,407.3
The discounted lease liability relating to the right of use assets included
above is shown in note 12.
As at 28 September 2024 the Group had entered into contractual capital
commitments amounting to £150.2m principally representing purchase of PCVs
and TOC commitments.
9 Property, plant and equipment (continued)
Owned assets and right of use assets Rolling stock £m Land and Passenger carrying vehicle fleet Other plant and equipment Total
buildings £m £m £m
£m
Carrying amount
At 28 September 2024 1,142.4 215.0 411.2 187.9 1,956.5
At 30 March 2024 1,347.8 204.1 411.7 191.8 2,155.4
The maturity analysis of lease liabilities is presented in note 12.
Amounts recognised in income statement 26 weeks to 28 September 2024 27 weeks to 30 September 2023
£m £m
Depreciation expense on right of use assets 235.6 216.8
Interest expense on lease liabilities 24.4 27.8
Impairment charge - 1.6
Expense relating to short-term leases - 0.8
Expense relating to leases of low value assets - 0.1
260.0 247.1
10 Trade and other receivables
Amounts due within one year (from continuing operations) 28 September 2024 30 March 2024
£m £m
Trade receivables 328.6 400.1
Loss allowance (42.0) (41.7)
Trade receivables net 286.6 358.4
Other receivables 172.3 187.6
Amounts recoverable on contracts 52.3 38.9
Prepayments 52.1 38.7
Accrued income 274.6 229.0
837.9 852.6
11 Borrowings
28 September 2024 30 March 2024 £m
£m
On demand or within one year
Leases (note 12) 1 468.7 492.8
Asset backed financial liabilities (note 12) 2 8.9 6.2
Bank overdraft 70.6 27.8
Bond 6.875% (repayable 2024) 3 - 99.7
Total current liabilities 548.2 626.5
Within one to two years
Leases (note 12) 1 309.2 385.0
Asset backed financial liabilities (note 12) 2 9.4 7.9
318.6 392.9
Within two to five years
Leases (note 12) 1 442.3 546.2
NextGen battery debt 11.5 3.0
Asset backed financial liabilities (note 12) 2 21.4 13.6
475.2 562.8
More than five years
Leases (note 12) 1 31.6 34.5
NextGen battery debt 7.9 10.2
Asset backed financial liabilities (note 12) 2 32.4 17.9
71.9 62.6
Total non-current liabilities 865.7 1,018.3
1 The right of use assets relating to lease liabilities are shown in note 9.
The maturity analysis of lease liabilities is presented in note 12.
2 The maturity analysis of asset backed financial liabilities is presented in
note 12.
3 Includes £nil of accrued interest (FY 2024: £3.5m of accrued interest).
12 Lease liabilities and asset backed financial liabilities
The Group had the following lease liabilities at the balance sheet dates:
Lease liabilities 28 September 2024 30 March 2024
£m £m
Due in less than one year 507.5 539.4
Due in more than one year but not more than two years 333.8 414.1
Due in more than two years but not more than five years 462.4 574.6
Due in more than five years 41.7 44.9
1,345.4 1,573.0
Less future financing charges (93.6) (114.5)
1,251.8 1,458.5
Comprising:
Lease liabilities – Rail 1,198.7 1,408.9
Lease liabilities – non-Rail 53.1 49.6
The Group had the following asset backed financial liabilities at the balance
sheet dates:
Asset backed financial liabilities 28 September 2024 30 March 2024
£m £m
Due in less than one year 9.4 6.5
Due in more than one year but not more than two years 10.4 8.5
Due in more than two years but not more than five years 26.0 16.2
Due in more than five years 44.2 23.7
90.0 54.9
Less future financing charges (17.9) (9.3)
72.1 45.6
Comprising:
Asset backed financial liabilities – non-Rail 72.1 45.6
Asset backed financial liabilities – Rail - -
13 Financial instruments
Non-derivative financial instruments
28 September 2024 30 March 2024
£m £m
Total non-derivatives
Total non-current assets 101.9 99.6
Total assets 101.9 99.6
Certain pension partnership structures were implemented during 2023. These
structures involved the creation of special purpose vehicles (SPVs) to hold
cash to fund the Bus and Group pension schemes, if required, based on a
designated funding mechanism. Management have concluded that these amounts
represent financial assets under IAS 32.
During H1 2024, FirstGroup Energy Ltd purchased a £1.0m fixed rate unsecured
convertible loan note in KleanDrive Ltd. Management have concluded that this
represents a financial asset under IAS 32.
13 Financial instruments (continued)
Derivative financial instruments
28 September 2024 30 March 2024
£m £m
Derivatives designated and effective as hedging instruments carried at fair value
Non-current assets
Fuel derivatives (cash flow hedge) - 0.4
- 0.4
Current assets
Fuel derivatives (cash flow hedge) - 2.0
- 2.0
Current liabilities
Fuel derivatives (cash flow hedge) 4.1 2.7
Currency forwards (cash flow hedge) 2.0 0.7
6.1 3.4
Non-current liabilities
Currency forwards (cash flow hedge) 0.7 0.2
Interest rate swaps (NextGen) 0.6 0.5
Fuel derivatives (cash flow hedge) 1.1 0.6
2.4 1.3
Fair value of the Group's financial assets and financial liabilities
(including trade and other receivables and trade and other payables) on a
continuing basis:
28 September 2024
Fair value Carrying value Total £m
Level 1 £m Level 2 £m Level 3 £m Total £m
Financial assets and derivatives
Trade and other receivables - 655.5 - 655.5 655.5
Financial liabilities and derivatives
Borrowings 1 70.6 1,352.1 - 1,422.7 1,414.0
Trade and other payables - 1,039.1 - 1,039.1 1,039.1
Derivative financial instruments - 8.5 - 8.5 8.5
30 March 2024
Fair value Carrying value Total £m
Level 1 £m Level 2 £m Level 3 £m Total £m
Financial assets and derivatives
Trade and other receivables - 668.0 - 668.0 668.0
Derivative financial instruments - 2.4 - 2.4 2.4
Financial liabilities and derivatives
Borrowings 1 - 1,621.0 - 1,621.0 1,616.9
Trade and other payables - 1,096.4 - 1,096.4 1,096.4
Derivative financial instruments - 4.7 - 4.7 4.7
1 Includes lease liabilities as set out in note 12.
The estimated fair value of cash and cash equivalents, short term trade and
other receivables and short term trade and other payables is a reasonable
approximation to the carrying value of these items.
Level 1: Quoted prices in active markets for identical assets and
liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable
market data.
There were no transfers between Level 1 and Level 2 during the current or
prior year.
14 Provisions
Insurance claims Dilapidations £m Legal and other Total
£m £m £m
At 31 March 2024 100.2 47.1 38.6 185.9
Charged to the income statement 7.7 (0.4) (4.9) 2.4
Utilised in the period (23.9) (1.6) (1.0) (26.5)
Notional interest 0.4 - - 0.4
Foreign exchange movements (3.1) (0.1) (0.6) (3.8)
At 28 September 2024 81.3 45.0 32.1 158.4
Current liabilities 25.2 20.8 18.9 64.9
Non-current liabilities 56.1 24.2 13.2 93.5
At 28 September 2024 81.3 45.0 32.1 158.4
Current liabilities 35.7 12.6 26.3 74.6
Non-current liabilities 64.5 34.5 12.3 111.3
At 30 March 2024 100.2 47.1 38.6 185.9
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 four years although certain
liabilities in respect of lifetime obligations of £1.0m (full year 2024:
£1.1m) can extend for more than 25 years. The utilisation of £23.9m in H1
2025 (full year 2024: £37.0m) represents payments made against the current
liability of the preceding year as well as the settlement of claims resulting
from incidents occurring in the current year.
The insurance claims provisions, of which, £36.6m (full year 2024: £55.7m)
relates to legacy Greyhound claims, includes £31.8m (full year 2024: £50.8m)
which is recoverable from insurance companies and a receivable is included
within other receivables in note 10.
Dilapidations 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.
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.
15 Called up share capital
28 September 2024 30 March 2024
£m £m
Allotted, called up and fully paid
750.7m ordinary shares of 5p each (30 March 2024: 750.7m) 37.5 37.5
The Company has one class of ordinary shares which carries no right to fixed
income.
On 8 June 2023, the Company announced a share buyback programme to purchase up
to £115m of ordinary shares. This buyback programme completed on 5 August
2024 having repurchased 71,200,278 shares.
The directors have declared an interim dividend of 1.7p per ordinary share in
respect of the period ended 28 September 2024, totalling approximately
c.£10m.
16 Net cash from operating activities
26 weeks to 28 September 2024 27 weeks to 30 September 2023 £m
£m
Operating profit/(loss) from:
Continuing Operations 100.3 (41.4)
Discontinued Operations 5.9 0.1
Total Operations 106.2 (41.3)
Adjustments for:
Depreciation charges 286.6 266.8
Capital grant amortisation (26.4) (25.1)
Software amortisation charges 1.0 2.1
Impairment charges - 2.1
Share-based payments 6.0 6.6
Loss/(profit) on disposal of property, plant and equipment 0.4 (0.9)
Operating cash flows before working capital and pensions 373.8 210.3
(Increase)/decrease in inventories (3.1) 0.6
Decrease/(increase) in receivables 11.6 (131.7)
Increase in payables due within one year 15.5 56.2
(Increase)/decrease in financial assets (1.0) 23.7
Decrease in provisions due within one year (11.0) (9.3)
Decrease in provisions due over one year (20.3) (9.5)
Settlement of foreign exchange hedge - (1.1)
Defined benefit pension payments (greater than)/lower than income statement charge (15.0) 113.1
Cash generated by operations 350.5 252.3
Tax paid (0.8) (1.5)
Interest paid 1 (35.6) (39.4)
Net cash from operating activities 314.1 211.4
1 Interest paid includes £24.4m relating to lease liabilities (H1
2024: £27.8m).
17 Analysis of changes in net debt – adjusted cash flow
At 31 March 2024 £m Cash Foreign Other At 28
flow Exchange £m September
£m £m 2024
£m
Bonds 1 (96.2) 102.8 - (6.6) -
Lease liabilities 1 (1,458.5) 267.7 - (61.0) (1,251.8)
Asset backed financial liabilities 1 (45.6) (25.3) - (1.2) (72.1)
Share of NextGen battery debt 1 (13.2) (4.6) - (1.6) (19.4)
Total movements on debt items (1,613.5) 340.6 - (70.4) (1,343.3)
Cash 246.9 (86.8) 1.5 0.3 161.9
Bank overdrafts (27.8) (42.5) - (0.3) (70.6)
Ring-fenced cash 249.6 25.3 - - 274.9
Cash and cash equivalents 468.7 (104.0) 1.5 - 366.2
Net debt (1,144.8) 236.6 1.5 (70.4) (977.1)
1 The ‘Other’ column for Bonds, Lease liabilities, Asset
backed financial liabilities and Share of NextGen battery debt consists of the
net inception of new leases, as well as interest charges. The ‘Cash flow’
column consists of repayments of principal and interest (financing activities
and operating activities respectively in the Condensed consolidated cash flow
statement).
18 Retirement benefit schemes
The Group supports defined contribution (DC) and defined benefit (DB) schemes
for the benefit of employees across the following business areas:
- UK Bus and Group – DB schemes: The First UK Bus Pension
Scheme and The FirstGroup Pension Scheme. DC schemes: The First Bus Retirement
Savings Plan and the Enhanced Lifetime Savings Plan. In the prior year, the
Group terminated its participation in two Local Government Pension Schemes
with affected employees enrolled into The First Bus Retirement Savings Plan
- North America – legacy schemes from operations which
have now been sold
- Rail – sponsoring four sections of the Railways Pension
Scheme (RPS) relating to the Group's obligations for its TOCs, with an
additional section for its open access Hull Trains business. Since the
obligations to the TOC arrangements are considered to be limited to
contributions during the period of the contract, these are fundamentally
different to the obligations to the other pension arrangements.
Each of these groups of arrangements have therefore been shown separately. The
scheme details are described on pages 236 to 247 of the Annual Report and
Accounts for the 53 weeks ended 30 March 2024.
(a) UK Bus and Group (including Hull Trains)
The table below is set out to show amounts charged/(credited) to the condensed
consolidated income statement along with the amounts included in the condensed
consolidated balance sheet arising from the fair value of schemes' assets
(Assets) and the present value of defined benefit obligations (DBO)
(Liabilities) for the UK Bus, Group and Hull Trains DB schemes:
Income statement 26 weeks to 28 September 2024 27 weeks to 30 September 2023
£m £m
Operating
– Current service and administration cost 4.4 2.2
– Past settlement gains including service gains and curtailments (3.2) (5.1)
– Settlement charge in relation to LGPS participation termination - 141.4
Total operating 1.2 138.5
Interest charge/(income) 0.1 (1.4)
Total income statement 1.3 137.1
Balance sheet 28 September 2024 30 March 2024
£m £m
Fair value of scheme assets 1,094.0 1,147.8
Present value of defined benefit obligations (1,062.1) (1,161.8)
Surplus/(deficit) in schemes 31.9 (14.0)
The amount is presented in the condensed consolidated balance sheet as follows:
Non-current assets 34.4 6.0
Non-current liabilities (2.5) (20.0)
31.9 (14.0)
(b) North America
Greyhound pension arrangements
The Group has retained certain responsibilities for the provision of
retirement benefits for some legacy schemes.
The Group operates a legacy DB arrangement in the US, while in Canada, there
is a legacy plan with a DB and DC section and a small unfunded supplementary
executive retirement plan (SERP).
On 16 July 2024, the Group agreed terms with an insurance company to buy out
the remaining liabilities of the legacy Greyhound US pension plan, with the
plan being terminated thereafter. Following a Group contribution of $6m, gross
liabilities valued at $155m (£123m) at the FY 2024 year-end were removed from
the Group's balance sheet and the Group recognised a net settlement gain after
related costs of £5.5m in the Group's income statement as an adjusting item.
The table below is set out to show amounts charged/(credited) to the condensed
consolidated income statement along with the amounts included in the condensed
consolidated balance sheet arising from the fair value of schemes' assets
(Assets) and the present value of DBO (Liabilities) for the North American DB
schemes:
18 Retirement benefit schemes (continued)
Income statement 26 weeks to 28 September 2024 27 weeks to 30 September 2023
£m £m
Operating
– Current service and administration cost 1.1 1.3
– Past service (gain)/charge including curtailments and settlements (6.2) 0.4
Total operating (5.1) 1.7
Interest charge/(income) 0.2 (0.1)
Total income statement (4.9) 1.6
Balance sheet 28 September 2024 30 March 2024
£m £m
Fair value of schemes' assets 150.9 264.8
Present value of defined benefit obligations (149.9) (276.1)
Surplus/(deficit) before adjustment 1.0 (11.3)
Opening irrecoverable surplus - (6.8)
Change in irrecoverable surplus - 6.8
Surplus/(deficit) in schemes 1.0 (11.3)
The amount is presented in the condensed consolidated balance sheet as follows:
Non-current assets 1.3 -
Non-current liabilities (0.3) (11.3)
1.0 (11.3)
(c) Rail contracts
The Railways Pension Scheme (RPS)
The Group is responsible for collecting and paying contributions for a number
of sections of the Railways Pension Scheme (RPS) as part of its obligations
under the contracts which it holds for its TOCs. These responsibilities
continue for the periods of the TOCs and are passed to future contract holders
when those TOCs terminate. Management of the RPS is not the responsibility of
the Group, nor is it liable to benefit from any future surplus or fund any
deficit of those funds.
The Group currently sponsors four sections of the RPS, relating to its
contracting obligations for its TOCs. The RPS is managed by the Railways
Pension Trustee Company Limited, and is subject to regulation from the
Pensions Regulator and relevant UK legislation. The RPS is a shared cost
arrangement. All costs, and any deficit or surplus, are shared 60% by the
employer and 40% by the members. For the TOC sections, under the contractual
arrangements with the DfT, the employer’s responsibility is to pay the
contributions following triennial funding valuations while it operates the
contracted services. These contributions are subject to change on
consideration of future statutory valuations, though the Group is fully
protected from any such changes through its contracts with the DfT. At the end
of the contract, any deficit or surplus in the scheme section passes to the
subsequent train operating company with no compensating payments from or to
the outgoing TOC.
The statutory funding valuations of the various Rail Pension Scheme sections
in which the Group is involved (last finalised with an effective date of 31
December 2022) and the IAS 19 actuarial valuations are carried out for
different purposes and may result in materially different results. The IAS 19
valuation is set out in the disclosures below. The accounting treatment for
the time-based risk-sharing feature of the Group’s participation in the RPS
is not explicitly considered by IAS 19 Employee Benefits (Revised). The
contributions currently committed to being paid to each TOC section are lower
than the share of the service cost (for current and future service) that would
normally be calculated under IAS 19 (Revised) and the Group does not account
for uncommitted contributions towards the sections’ current or expected
future deficits. Therefore, the Group does not need to reflect any deficit on
its balance sheet. A TOC adjustment (asset) exists that exactly offsets any
section deficit that would otherwise remain after reflecting the cost sharing
with the members. This reflects the legal position that some of the existing
deficit and some of the service costs in the current year will be funded in
future years beyond the term of the current contract and committed
contributions. The TOC adjustment on the balance sheet date reflects the
extent to which the Group is not currently committed to fund the deficit.
The table below is set out to show amounts charged/(credited) to the condensed
consolidated income statement along with the amounts included in the condensed
consolidated balance sheet arising from the fair value of schemes' assets
(Assets) and the present value of defined benefit obligations (DBO)
(Liabilities) for the TOC defined benefit schemes:
18 Retirement benefit schemes (continued)
Income statement 26 weeks to 28 September 2024 27 weeks to 30 September 2023
£m £m
Operating
– Current service cost 36.1 39.3
– Administrative cost 1.0 1.7
– Impact of franchise adjustment on operating cost (12.4) (13.8)
Total operating 24.7 27.2
Interest cost 2.5 0.6
Impact of franchise adjustment on net interest income (2.5) (0.6)
Total income statement 24.7 27.2
Balance sheet 28 September 2024 30 March 2024
£m £m
Fair value of schemes' assets 3,759.1 3,722.4
Present value of defined benefit obligations (3,551.5) (3,588.7)
Surplus/(deficit) before adjustment 207.6 (133.7)
Franchise adjustment (60%) (124.6) (80.3)
Adjustment for employee share of RPS deficits (40%) (83.0) (53.4)
Surplus in schemes - -
(d) Valuation assumptions
The valuation assumption used for accounting purposes have been made uniform
to Group standards, as appropriate, when each scheme is actuarially valued.
The key assumptions were as follows:
28 September 2024 30 March 2024
First Bus First Rail North America First Bus First Rail North America
% % % % % %
Key assumptions used:
Discount rate 5.08 – 5.11 4.89 4.53 4.86 – 4.88 4.89 4.85 – 5.16
Expected rate of salary increases n/a 3.46 n/a n/a 3.70 n/a
Inflation - CPI 2.54 – 2.56 2.46 2.00 2.61 – 2.62 2.60 2.00
Future pension increases 2.52 2 2.46 n/a 2.58 2 2.60 n/a
Post retirement mortality (life expectancy in years) 1
Current pensioners at 65: 19.3 20.1 19.8 – 21.6 19.3 20.1 19.8 – 21.6
Future pensioners at 65 aged 45 now: 19.7 21.5 21.4 – 22.6 19.7 21.5 21.4 – 22.6
1 Life expectancies reflect the largest underlying plans in each
region.
2 Weighted average for principal scheme.
Virgin Media case
In June 2023, the High Court made a significant ruling in Virgin Media Ltd vs
NTL Pension Trustees regarding the validity of amendments to benefits in
Defined Benefit pension schemes that were contracted-out between 1997 and 2016
based on meeting the reference scheme test. In July 2024, the Court of Appeal
upheld the High Court’s decision. The potential impact of this, if any, has
not yet been confirmed and, in light of the recent ruling, the Company will
continue to assess this in the second half of the year.
19 Contingent liabilities
To support subsidiary undertakings in their normal course of business,
FirstGroup plc and certain subsidiaries have indemnified certain banks and
insurance companies who have issued performance bonds for £50.1m (30 March
2024: £59.8m) and letters of credit for £134.0m (30 March 2024: £164.3m).
The performance bonds primarily relate to First Rail franchise operations of
£47.2m and residual North American obligations of £2.9m. The letters of
credit relate substantially to insurance arrangements in the UK and North
America. The parent company has committed further support facilities of up to
£100.9m to First Rail Train Operating Companies of which £76.0m remains
undrawn. Letters of credit remain in place to provide collateral for legacy
Greyhound insurance and pension obligations.
The Group is party to certain unsecured guarantees granted to banks for
overdraft and cash management facilities provided to itself and subsidiary
undertakings. The Company has given certain unsecured guarantees for the
liabilities of its subsidiary undertakings arising under certain HP contracts,
finance leases, operating leases and certain pension scheme arrangements. It
also provides unsecured cross guarantees to certain subsidiary undertakings as
required by VAT legislation. First Bus subsidiaries have provided unsecured
guarantees on a joint and several basis to the FirstGroup Pension Scheme
Trustee. One of the Company’s North American subsidiaries participated in
multi-employer pension plans in which their contributions were pooled with the
contributions of other contributing employers. The funding of those plans is
reliant on the ongoing involvement of third parties.
In its normal course of business the Group has ongoing contractual
negotiations with Government and other organisations. The Group is party to
legal proceedings and claims which arise in the normal course of business,
including but not limited to employment and safety claims. The Group takes
legal advice as to the likelihood of success of claims and counterclaims. No
provision is made where due to inherent uncertainties, no accurate
quantification of any cost, or timing of such cost, which may arise from any
of the legal proceedings can be determined.
The Group’s operations are required to comply with a wide range of
regulations, including environmental and emissions regulations. Failure to
comply with a particular regulation could result in a fine or penalty being
imposed on that business, as well as potential ancillary claims rooted in
noncompliance.
First MTR South Western Trains Limited (FSWT), a subsidiary of the Company and
the operator of the South Western railway contract, is a defendant to
collective proceedings before the UK Competition Appeal Tribunal (the CAT) in
respect of alleged breaches of UK competition law. Stagecoach South Western
Trains Limited (the former operator of the South Western network) was also a
defendant to these proceedings, but agreed a settlement of the claim against
it with the class representative (CR) which was approved by the CAT in May
2024 and, as a result, the claim that was originally brought against it is not
proceeding. Separate sets of proceedings have been issued against London &
South Eastern Railway Limited and related entities (LSER) and against Govia
Thameslink Railway Limited and related entities (GTR) in respect of the
operation of other rail services. The three sets of proceedings are being
heard together. The CR alleges that FSWT, LSER and GTR breached their
obligations under UK competition law by not making boundary fares sufficiently
available for sale, and/or by failing to ensure that customers were aware of
the existence of boundary fares and/or bought an appropriate fare in order to
avoid being charged twice for part of a journey. A collective proceedings
order (CPO) has been made by the CAT in respect of the proceedings. The
proceedings have been split into three trials, the first of which took place
in June/July 2024. As at 13 November 2024, the CAT had not issued its judgment
in relation to the first trial. The proceedings are currently stayed pending
the decision in the first trial, meaning that no dates are yet set for the
second and third trials. In March 2022, FSWT, the Company and the CR executed
an undertaking under which the Company has agreed to pay to the CR any sum of
damages and/or costs which FSWT fails to pay, and which FSWT is legally liable
to pay to the CR in respect of the claims (pursuant to any judgment, order or
award of a court or tribunal), including any sum in relation to any settlement
of the claims.
20 Related party transactions
There are no related party transactions or changes since the Group’s 2024
Annual Report which could have a material effect on the Group’s financial
position or performance of the Group in the 26 weeks to 28 September 2024.
21 Events after the reporting period
On 21 October, the Group announced its acquisition of Anderson Travel, a coach
operator providing contracted school, private hire, mini coach and tour
services in and around London. The acquisition will extend First Bus’
operational footprint and forms part of the Group’s strategy of targeted
acquisitions to grow its share of the UK adjacent services market.
On 25 October, the Group announced its acquisition of Lakeside Group, a
Shropshire and Cheshire-based company that provides school, B2B and B2C
private hire services, with a fleet of around 145 buses and coaches. The
acquisition will grow the Group’s coaching business and offers the potential
to increase our presence in the West Midlands.
Responsibility statement
The directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority and that the interim management report includes a fair
review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
* an indication of important events that have occurred during the first 26
weeks and their impact on the half yearly results, and a description of the
principal risks and uncertainties for the remaining 26 weeks of the financial
year; and
* material related-party transactions in the first 26 weeks and any material
changes in the related-party transactions described in the last annual report.
The Directors of FirstGroup plc are listed on the Group's website at
www.firstgroupplc.com.
Graham Sutherland Ryan Mangold
Chief Executive Officer Chief Financial Officer
14 November 2024 14 November 2024
Independent review report to FirstGroup plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed FirstGroup plc’s condensed consolidated interim financial
statements (the “interim financial statements”) in the Half-Yearly Report
of FirstGroup plc for the 26 week period ended 28 September 2024 (the
“period”).
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s Financial Conduct
Authority.
The interim financial statements comprise:
• the Condensed Consolidated Balance Sheet as at 28
September 2024;
• the Condensed Consolidated Income Statement for the
period then ended;
• the Condensed Consolidated Statement of Comprehensive
Income for the period then ended;
• the Condensed Consolidated Cash Flow Statement for the
period then ended;
• the Condensed Consolidated Statement of Changes in
Equity for the period then ended; and
• the explanatory notes to the interim financial
statements.
The interim financial statements included in the Half-Yearly Report of
FirstGroup plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, ‘Review of Interim Financial Information Performed by
the Independent Auditor of the Entity’ issued by the Financial Reporting
Council for use in the United Kingdom (“ISRE (UK) 2410”). A review of
interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half-Yearly Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half-Yearly Report, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half-Yearly Report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority. In preparing the Half-Yearly Report,
including the interim financial statements, the directors are responsible for
assessing the group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half-Yearly Report based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority and for no other purpose. We do not,
in giving this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
13 November 2024
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