FirstGroup plc (FGP.L) Earnings Call Transcript & Summary

Welcome to the FirstGroup Trading Update. [Operator Instructions] Just to remind you, this call is being recorded. Today, I'm pleased to present Matthew Gregory, Chief Executive; and Ryan Mangold, Chief Financial Officer; and David Martin, Chairman. Please begin your meeting.

Good morning, everyone. I'm very pleased to welcome you to this call following our announcement this morning of the sale of our student and transit businesses. As many of you know, I initiated a full strategic review of all options to unlock value for shareholders shortly after joining the Board in August 2019. We subsequently launched a sale process for our North American contract businesses in March last year. And whilst COVID inevitably delayed the process, we've been working hard behind the scenes to ensure that momentum and competitive tension was maintained, and that a full strategic value was achieved for these high-quality and resilient assets. This transaction clearly delivers on the Board's strategy to rationalize the portfolio and resolve the long-standing liabilities of the group, which, as you will know, are significant and have inevitably been impacted by the pandemic, whilst also giving us the opportunity to return value back to shareholders. And importantly, it will also leave a focused, well positioned and appropriately capitalized retained company that can go forward from here and create sustainable value for all our stakeholders. As FirstGroup enters this new strategic phase, the composition of the Board will evolve. As part of that evolution, we also announced today that 2 new nonexecutive directors will be joining the Board at the end of June. As Chairman, I'm clearly focused on ensuring we have the right balance of skills and experience for the future needs of the company. Before I hand over to Matthew to take you through the details, I want to extend my thanks to management, and indeed, to all our employees for their achievements in steering the company through the immense challenges of the past year. The team has done a great job, in my view, in delivering on the Board's strategic objectives through this sale and in making sure the group emerges from the pandemic in the strongest possible position. Matthew, over to you to discuss the transaction in more detail, but also to provide some color on the Board's clear view of the prospects for the retained company. Thereafter, we'll open up the call to questions. Thank you. Matthew?

Great. Thanks, David, and thanks, everyone, for joining us on what is an important day for FirstGroup. First off, I'm going to run through the headline details of the transaction and the key deal terms. I'll also discuss how we propose to use the proceeds from the transaction. And then finally, I'll spend some time reviewing the retained business and what the board sees as its strong credentials and prospects. The presentation is published on our website, and so I'll try to preface my comments with the slide number to help navigate to the particular section I'm referring to. So let's turn to the deal itself, starting on Page 2. Yesterday, we signed a contract for the sale of First Student and First Transit to EQT Infrastructure for a headline price of $4.6 billion. As I'm sure you're all aware, EQT is one of the world's largest global infrastructure funds. This transaction is in line with our portfolio rationalization strategy at the best means of unlocking value. We're pleased to have achieved the full strategic valuation for these high-quality assets, which is reflected in the multiple of 8.9x 2020 EBITDA on a pre-IFRS 16 basis. The transaction enables FirstGroup to address its long-standing liabilities, which include the North American pensions and self-insurance as well as derisk the U.K. defined benefit pension schemes and repay our CCFF loans to the Bank of England and significantly reduce our levels of debt. The transaction also enables a return of value to shareholders in the current calendar year. As we look ahead, the retained business will be an attractive company with a strong platform on which to create value. The role of public transport in delivering the U.K.'s economic, social and environmental agendas has never been clearer, and the policy backdrop has never been more supportive. We are a leading bus and rail operator in the U.K. We have plans in place to drive greater efficiencies and performance improvements throughout our business, and therefore, we are well placed to capture the many opportunities ahead of us. In summary, the retained group will be a sustainable and cash-generative business with a well-capitalized balance sheet and an operating model that will support an attractive dividend. So moving now on to Page 3. This transaction delivers on the Board's strategy. You'll recall we completed a full review of all options and determined the portfolio rationalization. And ultimately, the sale of student and transit with the best means to unlock the value. The sale we've announced today has come after a comprehensive and competitive process and recognizes the fundamental long-term strategic value of the 2 businesses despite the impact of COVID-19 over the past year. So turning to the deal terms. The businesses are being sold together, including the joint administration function that serves both for a headline price of $4.6 billion. From this gross value, there are a number of deductions that reflect the debt-like items attached to the business. We show this on the table below. Firstly, the buyer will take full responsibility for the self-insurance provision linked to student and transit valued at $0.5 billion, these transfer with the business. In addition, $240 million of the above gross value has been tied to the future valuation of First Transit and allows us to share in any value creation of that business. After deducting Transit's insurance provision, EQT will pay over a net amount of $370 million on closing, and then FirstGroup will share in any increase in value thereafter. The amount shared will be subject to an independent valuation of Transit within 3 years or a disposal value if it's sold on before that point, and the maximum $240 million is paid over if the earnout valuation reaches $750 million. The buyer is also assuming a number of other existing debt-like items, largely relating to a supply credit facility of $220 million and finance leases of $85 million, totaling $305 million. And finally, a combination of deferred CapEx and government tax payables of $110 million, which we were able to delay as a result of COVID; our working capital adjustment arising from the lockbox mechanism that's anticipated to be around $150 million as well as the FirstGroup America pension scheme; and other provisions and transaction costs, result in a further deduction of around $400 million. After deducting these items, we would have generated net proceeds of $3.1 billion or GBP 2.2 billion. Turning over the page to Page 4. Before running you through the details, it's worth highlighting that the Board has focused on 5 principal considerations as they determine the use of proceeds from this transaction. These considerations are as follows: returning value to shareholders, recognizing the value of the sale of the businesses; secondly, the need to address the substantial legacy liabilities of the group, including expensive debt, North American pensions and insurance provisions as well as the rail termination sums; the need to pay back the Bank of England GBP 300 million CCFF commercial paper; and making a responsible contribution to address the U.K. Bus pension scheme deficit, which has relied upon parent company guarantees, backed up by the student and transit cash flows; and finally, to ensure that the retained group has adequate resources in the short term, whilst our markets continue to face COVID-related challenges. So turning to Slide 5, there's a table to show you in more detail how we see these proceeds being used. So let's just work down the table. Point one. Firstly, we will reduce the group's indebtedness. You'll have noted from our [ RNS ] that we are flagging that we expect our 31st of March 2021 adjusted profit to be ahead of expectations and that we continue to actively manage cash and facilities to maintain a robust financial position and strong liquidity. At the 31st of March 2021, the group has net debt of GBP 1.4 billion before rail ring-fenced cash and on a pre-IFRS 16 basis. GBP 220 million of this will transfer with the U.S. businesses, which I noted on the previous slide. Of the existing GBP 1.4 billion debt, we'll be retaining the 2024 GBP 200 million bond as well as GBP 44 million of U.K. Bus finance leases to provide finance for the retained group. Therefore, we will repay the government's GBP 300 million CCFF paper, the recent GBP 250 million bridge facility that was drawn down to repay the GBP 350 million April 2021 bond and the GBP 325 million bond from 2022 as well as the USD 200 million private placement, GBP 120 million bilateral loans, GBP 450 million repayment to the RCF, all offset by existing cash at bank. So all in all, this nets to a repayment of GBP 935 million of debt. On point 2 on the table, this shows that the debt repayment will incur a total of GBP 65 million of make-whole costs for the GBP 325 million bond in the USPP. Next, as point 3 shows, we proposed to retain GBP 345 million, which is sufficient to derisk our Greyhound business, manage short-term capital requirements as we continue to manage our way through the pandemic and pay our rail termination sums, which due to the extension of the South West Railway and TPE ERMAs, they were not paid by the 31st of March 2021. At this point, let me touch on Greyhound. I can confirm that Greyhound remains a noncore asset and we continue to pursue all options to exit this business. In the meantime, we'll be retaining GBP 180 million to cover the net liabilities of Greyhound. This allows us to derisk the legacy pension as well as substantially buy out historic self-insurance liabilities, leaving a better capitalized balance sheet. As the only intercity bus operator in the U.S., the government continued to provide funding for Greyhound to maintain its national network, and we're continuing to actively manage the property portfolio for value. So this leaves us with net proceeds of GBP 845 million, from which we've agreed to make a substantial contribution to the U.K. pension schemes, return value to shareholders, while leaving an appropriate cash and therefore, net debt position in the context of the potential ongoing effects of the pandemic on the retained group. So item 4 on the table, following detailed and constructive negotiations with the trustees of our U.K. Bus and Group pension schemes, we've reached an agreement to make cash contributions that move these schemes to a low dependency position. We've sought to achieve a balance of an appropriate contribution whilst avoiding overfunding in the event of outperformance of the schemes. As a result, we've agreed a cash payment of GBP 220 million to the U.K. Bus scheme with a further GBP 95 million being paid into escrow, which could be returned in the event of a positive valuation in 4 years' time. In addition, we've agreed a GBP 21 million escrow payment for the much smaller group pension scheme with a similar repayment mechanism. In determining the return of value to shareholders, we've made a sensible assessment of the cash required to settle other liabilities as well as the prudent liquidity position I mentioned a moment ago. We intend to maintain pro forma net debt based on our view of the coming year of GBP 100 million. Given that we're keeping GBP 200 million 2024 bond and GBP 45 million of bus finance leases, this naturally means we'll be retaining cash of around GBP 150 million. Taking all of these into account, we're proposing a return to shareholders of GBP 365 million or 30p per share once the deal is completed. This is a responsible and fair approach to resolving our legacy liabilities, debt obligations, the pension schemes and the ongoing needs of the business as well as returning value to our shareholders. It's important to note, though, that there remains the potential for further distributions of value to shareholders in due course as we resolve Greyhound, crystallize the transit earnouts and as U.K. end markets recover. So turning to Page 6. Let me lay out how we see things proceeding from this point. The transaction is conditional on the approval of FirstGroup shareholders as well as a number of North American regulatory approvals. We expect the shareholder circular to be published as soon as practical with a shareholder meeting to approve the transaction, anticipated to be held towards the end of May. We'd expect the buyer to receive all the regulatory approvals and the completion of the transaction during the second half of the calendar year. The return of value to shareholders following completion will take place during this calendar year. As is common in this situation, we'll consult with our major shareholders as to the appropriate distribution mechanism. So having covered the main details of the transaction and our intended use of proceeds, I want to turn to the retained group and the Board's view of its future prospects. As David said at the outset, this transaction will leave the retained business well placed to create sustainable value for all of our stakeholders. As you'll see on Slide 8, we've laid out the key pillars of our investment case and have set out more details on each pillar on the subsequent slides. So let me just give you some more color on each. Turning to Slide 9 in our first pillar. Our business has a leading position in both bus and rail in the U.K. In bus, we have a share of around 20% of the regional bus market, serving 2/3 of the U.K.'s 15 largest conurbations, operating more than 5,000 vehicles with around 15,000 employees. In rail, we're the U.K.'s largest operator with 4 DfT-contracted operations and a market share of around 27%. This gives us a strong platform from which to grow revenues and our business. We have a professional and experienced management team in each business with our bus division led by Janette Bell, who joined us at the end of last year and rail led by Steve Montgomery. Moving to Slide 10. We're at a critical inflection point for public transport with the pandemic only serving to reinforce the need to build back better. It's clear that public transport is integral to driving economic growth, particularly in towns and cities that have been left behind. Government and social policy is demanding that we build back better and greener and that efforts to level up the economy need to redouble. The English National Bus Strategy with its GBP 3 billion of funding and the Scottish bus funding schemes that we've recently won a large proportion of, together with the changes to the rail franchising model, all helped demonstrate that ambitious government policy and fiscal support will place public transport center stage. The third point on our investment case on Slide 11 reflects the role of digital innovation in attracting more customers and ensuring we're operating as efficiently as possible. Previous examples include real-time seat capacity and Tap & Cap ticketing in First Bus, and we continue to drive further improvements to the digital offering that will greatly enhance the customer experience and remove friction points. In rail, we've developed industry-leading 5G technology to dramatically improve Internet capability on the railways. And part of the SWR network will be the first to receive the new technology, followed by Avanti later. The next 2 points focus on the business model for each division. In First Bus, we were already well on the way to our 10% margin target before the pandemic interrupted progress, and you can see the trajectory on Slide 12. While some uncertainty will remain in the short term, we were encouraged by passenger volumes that reached 60% of prepandemic levels in a number of regions when restrictions eased somewhat last summer. Our studies indicate that the vast majority of passengers intend to return to bus travel post-pandemic. And our central planning assumption is that passenger volumes will reach between 80% to 90% of prepandemic levels during the first year after social distancing restrictions on buses end. We'll be working with local authorities to realign networks to reflect new demand levels and to ensure that bus prioritization measures are fully assessed and introduced. From a cost perspective, we're focusing on making the business more efficient as well as implementing new engineering and scheduling systems that will transform the ability to plan and manage the business. We are taking the opportunity to accelerate cost efficiency plans where practical during the pandemic and review poor-performing routes and networks and readiness for when volumes return. Turning to rail on Slide 13. We're pleased that the government has taken the opportunity to accelerate the much-needed changes to the franchising model during the pandemic. As you know, we've long advocated for a better balance of risk and reward with a greater focus on the customer. The transition away from franchises via the emergency measures through to the National Rail Contracts goes a long way to achieving this. And as the largest operator with 4 contracted operations, which were expected to be in place until at least 2023, we will benefit from this long-awaited transition. We've highlighted some of the key differences between the old franchising system and the emerging National Rail Contract structure. And the key point is that the new structure will have no revenue risk and minimal cost risk as well as he vastly reduced contingent capital requirements. The National Rail Contracts will be concession-based with operators earning an annual management fee and a performance incentive. The overall fee will be the equivalent to a low single-digit margin, similar to the existing ERMAs, but will drive greater consistency in terms of profit and cash, giving greater resilience. Moving on to Slide 14. Over and above our strong position in our existing markets, our investment case looks at further opportunities that will be available to the business once revenue levels have stabilized. The bus business will look to maximize its current footprint through further tenders and B2B opportunities that will arise. And rail will continue to develop its open access footprint as well as 5G technological capabilities, consulting and call centers. Finally, and perhaps most importantly, on Slide 15, FirstGroup stands ready as a critical enabler of society's ESG goals. We have a clear social purpose and through our mobility beyond today's sustainability framework, we are setting out to be the partner of choice, building on our strong credentials to play a leading role in accelerating the transition to a zero carbon world. Turning to Slide 16. This investment case underpins our financial framework, and I'll take you through the details. From a revenue perspective, we expect bus volumes to return to between 80% to 90% of prepandemic levels during the first year after social distancing on buses ends with further growth thereafter. In terms of profitability, we made good progress and have clear achievable plans to reach a 10% EBIT margin in bus. Rail margins reflect the lower risk nature of the new framework and represents a more stable and resilient profit and cash flow. And the smaller retained group will naturally lead to a lower central cost, aligned to our work to decentralize appropriate responsibilities into the divisions. Turning to our investment plans. We expect to invest around GBP 90 million per annum on e-buses as we transition the fleet from diesel technology to zero emission buses along with the appropriate funding from government to assist with this. The concept of rail CapEx remains unchanged. Whilst we will have to account for CapEx according to the accounting principles, the group will not be responsible for any rail capital investment as it will continue to be funded through the train operating company contracts with the DfT. Moving on to our leverage and dividend. We intend to base our policies on cash-based definitions. This might be considered to be more complex than using headline P&L values. However, this will ensure that we are tying our leverage and return profiles to the actual cash generation of the business that flows through to the group. And the reason for this, as you know, is that under the new arrangement, Rail's income is better considered in terms of the cash dividends that each [ top ] can pay over to the PLC, reflecting the fees earned. As a result, our leverage policy will be based on maintaining net debt at less than 2x a very specific EBITDA measure, which we'll report in detail within our results. And the EBITDA measure will represent bus, a noncontracted rail EBITDA plus the contracted rail dividends less the plc central cost. Turning to the dividend. We're clear that the retained group's financial profile will be able to support a regular dividend to shareholders and expect to be able to do so from the 2023 financial year as conditions normalize post pandemic. We'll be targeting a dividend payment, which will be around 3x covered by a new adjusted profit after tax measure. Similar to the leverage measure, this will be focused on effective cash rather than income measures. And this measure will be defined as bus and noncontracted rail adjusted operating profit, plus the contracted rail dividends minus central costs, interest and tax. And again, we'll give full disclosure on this measure in our accounts. In summary, we expect the retained group to be a cash-generative business with a well-capitalized balance sheet, capable of supporting an attractive dividend. So finally, on Slide 16. Let me conclude by saying that this transaction allows us to deliver on the Board's strategy to rationalize the portfolio, achieving a full strategic value for our long-term and high-quality student and transit business. This enabled us to significantly derisk the group and address the substantial legacy liabilities in a responsible way. And shareholders will receive 30p per share of return of value, and there is a potential for further capital return when end markets recover, and there, retained group is well placed to create sustainable value and support an attractive dividend. So thank you for listening. And now I'll turn it over for questions, please.

[Operator Instructions] Our first question comes from the line of Jarrod Castle from UBS.

Three for me. You kind of said the 2021 performance is above your expectations, but any color in terms of where your expectations are now? Second question, you talked about 80% to 90% post social distancing after the first year, but any commentary on the possibility of getting back to 100%, given previous structural headwinds such as working from home, congestion and e-commerce? And then the third question, just in terms of your CapEx, the GBP 90 million. Do you think you can still get the historic returns on invested capital that you've achieved in the past as you make the transition towards green? And how will that be achieved? Is it through volumes, pricing, government subsidies?

Great. Okay. Well, thanks for that. Well, look, I think I'll cover off a couple of those points, and we'll work with Ryan on maybe adding some of the color there. So look, looking to 2021 expectations, Ryan, do you want to just make a comment on that?

Yes. We think that the analyst consensus range we're looking at is roughly on top of the range of about GBP 171 million. We think that we're going to come in slightly ahead of that. Clearly, this is a full year-end, and so it will still be subject to audit. But at this stage, we are seeing our adjusted operating profit coming in slightly ahead of the top of the range of analyst consensus forecast.

Yes. So a good performance from the business as we've closed out the end of the financial year. So let me just cover off the 80% to 90%. So we're talking very specifically about bus. And I think the bus journeys are very different from the rail journeys. These are sort of generally intercity, they're shorter journeys. All the surveys that we've done are indicating that the vast majority of our passengers want to get back on the bus. And then we have a much lower exposure in the bus business to some of the commuting and potential sort of working from home type issues. So I think from our perspective, particularly when you look at the fact that we got up to 60% at the end of August, beginning of September, when the social distancing rules were starting to ease. We're comfortable that we'll get up to that 80% to 90%. And then it's really a question of working hard with the authorities, working hard on our offering and really promoting the use of the bus. But we do see the potential. Again, as I talked about the very positive environment for getting people out of their cars and onto buses and all the funding, the first time we've had a National Bus Strategy. It's a really positive environment for public transport. So we think get back to 80% to 90% in the first year, and after that, we do see the opportunity for growth, which is probably the first time the industry has seen that opportunity for quite a long time, actually. And then coming up to your point on CapEx, I mean, we expect to be able to make a decent return on the investment in buses, and we expect that to be a double-digit return. And I think what this requires, it requires a combination of improvement in EBIT, and we've talked about our plans to improve profitability in bus. It talks about working with the local authority to improve bus prioritization, reducing congestion, so that we can get more people attracted to coming to the bus. And then also relies on the government funding, which, again, you've seen that as part of the National Bus Strategy, the commitment to fund initially 4,000 electric vehicles to ensure that the economics of buying new buses is not wholly based on the bus industry. So it's a combination of many things, but I think that the primary message we'd give you is that the environment for bus travel and the government and social policy that's currently in place is more supportive than we've seen for many years.

And I think it's just worth adding to that, the recent investments that we're making in Glasgow and York from part of electrification, all of the returns on those investments are into that double-digit returns post tax that Matthew mentioned.

Thanks for that.

Our next question comes from Sathish Sivakumar from Citigroup.

Yes, congratulations on the disposal, actually. I've got three questions. So on the pension, you actually highlighted that you no longer see that as a risk. I just wanted to confirm that. Have you bought any insurance like annuity plans so that it doesn't come up as a big advent for you, say, in 3 years' time? Is there any protection against that? And then secondly, on the Greyhound, could you share some details around the existing assets? Like, obviously, you did some disposal back end of last year. Are there any further opportunity like one of the disposal around Greyhound. And thirdly, around the First Bus, on your Slide 14, you talk about the adjacent U.K. opportunities. And I assume that it doesn't talk about anything around the inorganic. So do you see any inorganic growth potential? And then just on that, on those 4 points that you listed there. What is the -- actually the size of the market that you're trying to address there?

All right. Thank you, Sathish, I'll start with the pensions. We are constantly working actively with the trustee to derisk the scheme anywhere before the contribution. Following the contribution, we would be able to just derisk the scheme even further, therefore, make it less volatile to a potential return of the escrow monies in the future. And so all things being equal from an actuarial perspective and expected return on planned assets plus the derisking, we'd expect some of the escrow monies to be returned back to the group in due course.

Great. So let me cover off the Greyhound point then. Yes, you're right. We did make some big property sales at the back end of last year. We sold our Los Angeles and Denver facilities plus a facility in Canada. And it's probably fair to say that those two are the bigger ones that we've been working on. So the properties that we've got left are probably much sort of smaller -- there's a number of them, but much smaller assets to us. I mean what I'd say about Greyhound, look, we are committed to continue pursuing our exit of that. We talked about retaining money to cover the historic pension insurance liabilities, so that derisks that Greyhound balance sheet. And there are still opportunities on the property side, and we're working hard to sort of find a way through that. I think I'll comment on the bus side. Look, you're right, we comment around sort of international or inorganic potential. I think the key thing for us is we need to get through this initial or exit the COVID situation. We need -- we're very pleased to have got this transaction done at a very, very good valuation. It allows us to deal with these legacy liabilities. By the time we're through that and by the time we're through COVID, we feel that we'll be in a position that the business will be more stable, but we have to get there first. From that point, once we've got a stable and derisked position, we can then look at the opportunities around the bus market, the rail market. And we're not ruling out the fact there may be sort of inorganic opportunities out there. And just to come to your sort of -- your final point, the size of the U.K. Bus market is around that sort of GBP 3.5 billion, and we're a 20% player in that regional space. But again, the thing with bus, it's all about getting people out of their cars and getting onto the buses. We've got a very supportive public transport policy at the moment. And we're very encouraged by the amount of money that's being put by the government and the work that's being done to really encourage the use of public transport. And that will grow the market, and that's what we all want to see.

Yes. So just on the U.K. opportunity, I have a couple of questions. Just a follow-up on that, please. So you mentioned about the B2B private contract, so -- and then charter projects and third-party EV vehicle charging. What does that actually imply in terms of revenue stream? What will be the percentage portion of that new revenues coming from this additional stream?

Yes. I mean these are very good questions and I understand the point. I mean, obviously, today, we're really laying out the transaction that we've done. And the key part of the conversation there is about the transaction. But we do want to give people a view and a sense of our investment case. So what we're highlighting here are opportunities that we can get into as we work through the pandemic and we stabilize the group. But to come back to your specific points, I mean, we already have a business that does a lot of B2B private charters. We're the largest sort of rail replacement bus operator. We have a business that gets involved in specific one-off charter projects. We got involved in commonwealth games. We're getting involved in the Olympics and there's opportunity to grow into that marketplace. And these are multi, sort of, hundred million addressable markets. The third point about electric vehicle charging, Mobility as a Service, autonomous vehicles, these are all very nascent markets in the U.K. So we're making sure we're keeping abreast of the developments, getting involved in pilots as these markets start to get off the ground. So what it's telling us is there's just a lot of opportunity out there once we stabilize the business and derisk the business, we'll be very well placed to benefit from those opportunities.

Our next question comes from the line of Gerald Khoo from Liberum.

Three questions, if I can. Firstly, on leverage. You talked about sort of target leverage on your new definition of under 2x. And also, you talked about pro forma net debt of GBP 100 million, that I assume is well south of 2x on the new basis. How do you go from the GBP 100 million to up to 2x? Is that the sort of headwind that you've allowed yourself to get through the rest of COVID? Have you got other headroom that you've reserved for something else? Just to understand -- just trying to understand what would get you up to your target leverage. Secondly, can you just confirm whether the buyer, whether EQT has owned anything that potentially overlaps and whether there's any antitrust issue that we need to be conscious of here? And finally, you talked about 10% margin in First Bus in due course. What have you assumed in terms of any transition arrangement after CBSSG within that? And generally, are you still expecting the government to be forthcoming with some transition funding after CBSSG ends?

Sure. Okay. Well, let me take the second two of those first, and we'll talk about the leverage point. Ryan will chip in as well. So look, I think from the buyer perspective, it's interesting. This transaction sold to a major infrastructure fund is the first significant transaction of a student bus business by an infrastructure fund. So that's encouraging because it sort of moves the marketplace. It's a bit of an innovative transaction here. So no, we're not expecting any regulatory issues from that. In terms of the bus margin, I mean, we're obviously expecting funding from the government until social distancing is called to a halt. We're then expecting transition funding to enable us to agree partnerships with the local authorities. And from that point, we're expecting to go back onto the full commercial model. So looking at the leverage point, I mean, yes, you're right. We have taken a view on our leverage and it is below the 2x because we're still in a position where there is a COVID crisis going on. We are still working our way through that. We performed well this year, very well, I think, in a number of our businesses. But there's still a little bit of uncertainty out there. And in terms of how we sort of get up to that 2x leverage, well, we just have to continue trading through the end of the pandemic. We'll be looking to complete this transaction. We'll be looking to resolve some of these issues like Greyhound, for example. And then we'll be able to assess our leverage position based on the sort of economic outlook and the business performance. Anything you want to add on that, Ryan?