Strategic Decarbonisation Partnership with Hitachi

FirstGroup plc (the `Group') is pleased to announce that it has agreed a strategic partnership with Hitachi as part of the Group's bus fleet and infrastructure decarbonisation programme. The partnership will provide the following:

a newly formed 50:50 joint venture, NextGen AssetCo Limited (`NextGen'), to purchase up to 1,000 electric bus batteries valued at c.£100m, as part of First Bus's expanding electric bus fleet;

an anticipated contribution to the Group's adjusted earnings of c.£3m per annum by FY 2026 before any potential operational benefits;

a c.£20m saving in the Group's FY 2024 capital expenditure, combined with future savings of c.£40m to FY 2027; the Group now anticipates an FY 2024 year end adjusted net cash position of £40-50m.

The key terms of the strategic partnership with Hitachi ZeroCarbon Limited (`Hitachi ZeroCarbon') include:

an option for the Group to participate, via a small minority interest, in future value creation through the deployment of Hitachi ZeroCarbon's decarbonisation solutions to commercial fleet operators worldwide;

the batteries will be leased from NextGen to First Bus over an initial eight-year period, at an underlying debt finance rate in line with the Group's borrowing rate, with the potential to extend the lease by a further two years at zero cost depending on battery capacity;

the Group will retain 75% of the residual value of the batteries at the end of its bus useful life, with material second life value opportunities given that the majority of the battery's capacity remains;

the provision of Battery and Charging Management Services (`BCMS') by Hitachi ZeroCarbon for 1,000 buses powered by the new batteries as well as a further commitment of 500 vehicles beyond FY 2026 as part of First Bus fleet decarbonisation;

the BCMS services will ensure efficient energy utilisation, maximise battery health and residual value and potentially extend battery bus useful life for a further two years beyond the OEM warranty period.

Graham Sutherland, FirstGroup Chief Executive Officer said:

"The pioneering alliance with Hitachi is a major strategic partnership for the Group as we progress towards our ambitious 2035 decarbonisation target for our bus fleet. It will allow us to continue the electrification of our fleet and depots with increased efficiency and greater visibility of our financial commitment, and unlike other possible arrangements, we will retain much of the residual value in the batteries as they are taken off our buses. Looking ahead, we are also excited about the possibilities for future value creation as Hitachi ZeroCarbon delivers market leading decarbonisation solutions to transport operators worldwide, leveraging our joint experience."

Alistair Dormer, Executive Vice President and Executive Officer, General Manager of Green Energy & Mobility Strategy Planning Division, Hitachi Ltd. said:

"Hitachi is committed to becoming a climate change innovator. We continuously strive for growth through collaboration and co-creation with our partners and customers, and this specific partnership enables us to use our innovative technologies and global expertise to help decarbonise fleets efficiently, discover untapped revenue streams and maximise the residual value of assets. I'm delighted we've successfully grown our existing relationship with FirstGroup, which will further add to our decarbonisation experience and combined learnings, in developing solutions for transport operators globally."

About Hitachi ZeroCarbon

Hitachi ZeroCarbon is a subsidiary of Hitachi Ltd. Its mission is to provide innovative end-to-end solutions to decarbonise commercial vehicle fleets globally, helping them to accelerate electrification and sustainability, reduce battery risk and total cost of ownership, and generate new revenues.

Through data analytics and digital optimisation technologies, Hitachi ZeroCarbon provides a platform to optimise battery performance and life, charge Electric Vehicle fleets and decarbonise sites and depots through a Battery Charging and Management-as-a-Service model. Hitachi ZeroCarbon's solutions are designed to meet the unique needs of commercial vehicle fleets, offering a range of charging options that maximises fleet efficiency and minimises costs. In addition, leveraging Hitachi's global reach and industry experience, Hitachi ZeroCarbon can provide battery financing solutions to help accelerate electric fleet transition, reduce capital expenditure, and maximise the residual value of assets. Further information can be accessed on the Hitachi ZeroCarbon website at https://zerocarbon.hitachi.com.

The contracting entity for Hitachi is Hitachi Rail Limited, a wholly owned subsidiary of Hitachi Group.