Author Topic: FIRSTGROUP PLC HALF-YEARLY RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2011  (Read 1812 times)

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Embargoed until 07:00hrs on Wednesday 9 November 2011

FIRSTGROUP PLC
HALF-YEARLY RESULTS
FOR THE SIX MONTHS TO 30 SEPTEMBER 2011
• Overall trading for the Group in line with our expectations
• Addressing First Student – executing business recovery plan, achieving good momentum and
positive early indicators; operating margin in H2 expected to be in line with same period last year
• Continued growth in First Transit with strong pipeline of opportunities
• Greyhound transformation delivering results – good revenue growth and margin improvement
• UK Bus priority is to manage immediate challenges of softening economy while equipping the
business to deliver increased growth
• Further strong growth in UK Rail; FTPE franchise extended for three years to 2015
• Continued focus on cash generation to support capital investment, debt reduction and dividend
growth of 7%
• Targeting net cash inflow of £150m for 2011/12 including further selective asset and business
disposals
Continuing operations4:
2011 2010
Change
Revenue £3,168.8m £3,069.9m +3.2%
Adjusted EBITDA1 £323.4m £331.3m (2.4)%
Operating profit £216.3m £173.5m +24.7%
Adjusted operating profit2 £163.0m £170.4m (4.3)%
Profit before tax £127.8m £81.8m +56.2%
Adjusted profit before tax2 £84.5m £77.5m +9.0%
Basic EPS 18.3p 11.4p +60.5%
Adjusted basic EPS2 11.2p 10.5p +6.7%
Proposed dividend per share 7.62p 7.12p +7.0%
Net debt3 £2,058.7m £2,190.8m (6.0)%
1 Adjusted operating profit plus depreciation.
2 Before amortisation charges, ineffectiveness on financial derivatives, exceptional items, loss on disposal of properties and discontinued operations. All
references to “adjusted” figures throughout this document are defined in this way.
3 Net debt is stated excluding accrued bond interest.
4For all businesses excluding UK Rail this half year includes 27 weeks compared to 26 weeks for the corresponding period last year.
Commenting, FirstGroup's Chief Executive, Tim O’Toole said:
“I am pleased to report that overall Group trading for the first half of the current financial year is in line
with our expectations. In First Student we are executing our plan to address performance and
strengthen the operating model and I am encouraged by the positive early indicators. At Greyhound
our actions to transform the business are delivering results with good revenue growth and margin
improvement. First Transit continues to deliver growth and has a strong pipeline of further
opportunities. In our UK Bus operations, which are focused in high density urban areas, our priorities
are to manage the immediate challenges presented by a softening macroeconomic outlook and
reduced funding to the industry while also taking the necessary forward looking decisions to equip the
business to deliver increased growth. Strong passenger demand continues across all of our rail
operations and we look forward to building on our market leading position and developing further
opportunities once the Department for Transport’s new rail franchising programme commences in
2012. With market leading positions and operations that are fundamentally strong, together with our
clear focus on creating a stronger business for the future, the Group has good prospects to deliver
long-term value for shareholders in a sector which is a key enabler of economic growth.”
Contacts FirstGroup plc:
Tim O’Toole, Chief Executive, and Jeff Carr, Finance Director - Tel: +44 (0) 20 7291 0512
Rachael Borthwick, Corporate Communications Director - Tel: +44 (0) 20 7291 0508 / +44 (0) 7771 945432
2
A PRESENTATION TO INVESTORS AND ANALYSTS WILL TAKE PLACE AT 9:00AM TODAY
ATTENDANCE IS BY INVITATION ONLY
A LIVE TELEPHONE ‘LISTEN IN’ FACILITY IS AVAILABLE
FOR DETAILS PLEASE CONTACT +44 (0) 20 7291 0512
A PLAYBACK FACILITY WILL BE AVAILABLE AT WWW.FIRSTGROUP.COM
PHOTOS FOR THE MEDIA ARE AVAILABLE. PLEASE CALL +44 (0) 20 7291 0512
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Chairman’s statement
I am pleased to report that during the first half of the current financial year the Group again demonstrated the inherent
strength it derives from a diverse portfolio of operations that are fundamentally strong. While addressing the challenges
of the current weak economic environment in certain markets in which we operate, management has a clear focus on
creating a stronger business, centred on our core operations, and is taking the necessary forward looking decisions to
ensure the business is well positioned to deliver sustainable growth for the longer term.
There is no doubt that public transport is a key enabler of economic growth and an essential component of vibrant and
sustainable local and regional economies. The Group, which has grown rapidly and achieved considerable success
since its formation, is going through an important stage in its development. Under Tim O’Toole’s leadership there is
clear focus to drive greater operational performance and efficiency across the business and to ensure that the Group
will benefit from future growth opportunities as the economic environment improves.
We remain focused on cash generation to support capital investment, debt reduction and dividend growth. The Board
remains committed to an investment grade credit rating for the Group. Last year we made good progress in reducing
leverage to levels closer to our target range and will continue to progress our plans in the current year.
Dividend growth is a key element in the investment decision for many shareholders and we are committed to delivering
sustained real growth in dividends. The Board has proposed an interim dividend per share of 7.62p representing an
increase of 7%, in line with our current commitment, which will be paid on 1 February 2012 to shareholders on the
register at 6 January 2012.
In September Jeff Carr, Finance Director, informed the Board of his intention to leave the Group to take up the role of
Chief Financial Officer of Royal Ahold NV based in the Netherlands. Jeff will leave the Group on 11 November 2011
and a search for his replacement is underway, enabling the Board to consider internal and external candidates. I would
like to thank Jeff for his contribution to the Group and wish him every success in his new role. Nick Chevis, who has
been with the Group since 1997 and held a number of senior finance roles, will become Acting Finance Director to
ensure the continuation of strong financial leadership and control.
Finally on behalf of the Board I would like to extend our sincere thanks and gratitude to our 125,000 employees across
the UK and North America. Their professionalism and commitment to serving the 2.5 billion passengers that we
transport each year is key to our success now and for the future.
With leading positions in its core markets and a clear focus on creating a stronger business for the future, the Board is
confident that the Group has good prospects to continue to deliver long-term value for shareholders.
Martin Gilbert
Chairman
8 November 2011
* Operating profit referred to throughout this document refers to operating profit before amortisation charges, ineffectiveness on
financial derivatives, exceptional items, loss on disposal of properties and discontinued operations. EBITDA is adjusted operating profit
plus depreciation.
**For all businesses excluding UK Rail this half year includes 27 weeks compared to 26 weeks for the corresponding period last year.
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Operating and Financial Review
Group results
Group revenue increased by 3.2% to £3,168.8m (2010: £3,069.9m) and adjusted operating profit was £163.0m (2010:
£170.4m), reflecting the expected reduction in First Student profits partly offset by higher profits and margin
improvement in all the other businesses. Statutory operating profit increased to £216.3m (2010: £173.5m) reflecting a
favourable outcome on net exceptional items compared to the same period last year. Adjusted basic EPS increased by
6.7% to 11.2p (2010: 10.5p). Adjusted EBITDA was £323.4m (2010: £331.3m).
Operating Operating Operating Operating Operating Operating
Revenue profit1 margin1
Revenue profit1 margin1
Revenue profit1 margin1
Divisional results £m £m % £m £m % £m £m %
First Student 683.3 5.5 0 .8 711.4 28.0 3 .9 1,594.4 128.3 8 .0
First Transit 387.3 27.2 7 .0 392.7 26.0 6 .6 771.5 5 7.2 7 .4
Greyhound 343.6 30.5 8 .9 337.6 25.6 7 .6 634.6 4 0.2 6 .3
UK Bus 586.9 59.4 1 0.1 570.5 55.4 9 .7 1,137.5 148.8 1 3.1
UK Rail 1,162.6 55.7 4 .8 1,053.1 48.4 4 .6 2,269.8 108.7 4 .8
Group2 5.1 (15.3) - 4 .6 (13.0) - 8 .9 (26.5) -
Total Group 3,168.8 163.0 5 .1 3,069.9 170.4 5 .6 6,416.7 456.7 7 .1
6 months to 30 September 2011³ 6 months to 30 September 2010 Year to 31 March 2011
1Adjusted.
2Tram operations, central management and other items.
³For all businesses excluding UK Rail this half year includes 27 weeks compared to 26 weeks for the corresponding period last year
FIRST STUDENT
As previously indicated, trading during the first six months of the current financial year reflected the carry-over of last
year’s performance. Revenue was $1,107.6m or £683.3m (2010: $1,074.6m or £711.4m). Adjusting for the extra week
versus the same period last year, US Dollar revenues were 2.4% lower year-on-year. Operating profit was $9.0m or
£5.5m (2010: $40.0m or £28.0m).
We are pleased with the progress we are making in executing our business recovery plan and with good momentum
now achieved across the business we are seeing positive early indicators.
As a result of the improved performance during the recent bidding season together with the actions we are taking, we
expect operating margin for the second half of the year to be broadly in line with the same period last year.
Despite the challenges presented by ongoing pressure on school board budgets, our strategy to focus on retention
delivered an improved performance in the recent bidding round for the 2011/12 school year. We strengthened our
commercial team and implemented our plan to reduce the amount of contract churn in our portfolio. As a result retention
returned to approximately 90% and we were pleased that our ten largest contracts up for renewal during the last bid
season were all retained.
Overall conversion activity is high as a result of budgetary pressures on school boards, however the pace of
outsourcing industry-wide remains slow. During the recent bid season we won 11 conversion contracts to operate
approximately 330 buses in States including Pennsylvania and Michigan. We are focusing our activity in a number of
targeted States where there is greater potential for outsourcing.
During the period we completed a significant restructuring of the business to create a more agile and sustainable
operating model. The new role mandates we have introduced provide clarity across the organisation enabling our
regional and local management to focus on what is important supported by a revised performance management
process, incentive structure and key performance indicators. As we progress our plans to achieve the operational
excellence and efficiency that should derive from our scale we are systematically rolling out best practices across all of
our locations.
Improving labour productivity is a key area within our business recovery plan. We continue to advance the roll out of
FOCUS, our GPS software that links on-board data with engineering, payroll and back office systems. This enables us
to manage standard driving hours more accurately as well as eliminate excess miles and reduce idling time. We are
also trialling certain elements of FOCUS to give customers direct access to real time information and performance
metrics to enable them to respond quickly and accurately to queries. Positive feedback from customers supports our
view that FOCUS will provide differentiation within the market in the future.
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We are driving efficiency improvements across the business including in the areas of engineering and maintenance
where we are implementing lean practices that will deliver productivity and efficiency improvements. We are very
encouraged by the efficiencies identified which indicate scope to achieve approximately 10% productivity improvement
in maintenance processes as best practices are rolled out across our locations.
Early indications suggest that the charter market is beginning to stabilise. We are progressing opportunities and
implementing plans to increase our charter activity including rolling out best practices across our operations and
launching a pilot to create contact centres covering key markets where we see significant potential. As a result we have
seen encouraging growth particularly in the non-school charter market.
As the market leader First Student is uniquely placed to leverage its scale. As we build the Student business for the
future we will continue to invest in significant programmes, including comprehensive training at the local level, creating
a unified direction with more efficient and consistent practices. With a more agile business model and significantly
improved operating leverage, First Student will be well positioned to harness its potential and extend its leadership
position to deliver long-term, sustainable growth.
FIRST TRANSIT
Revenue increased to $627.3m or £387.3m (2010: $596.5m or £392.7m). After adjusting for the extra week US Dollar
revenues increased by 1.2% from the same period last year. Operating profit was $44.1m or £27.2m (2010: $39.6m or
£26.0m) and operating margin improved to 7.0%.
We continue to focus on our core business segments and delivered a strong performance from our shuttle bus
business. During the period we won new business including contracts to operate shuttle bus services at Yale and
Kennesaw State universities and also additional services within existing contracts including in Fort McMurray in Alberta,
Canada. We have been notified of the award of significant contracts for a non-emergency medical transportation call
centre in Colorado and to provide fixed route and paratransit services in Fort Bend, Texas.
First Transit is benefiting from our investment in innovation as we introduce new products to build on our industry
leading position. Our Vehicle Diagnostic System will enable First Transit and First Vehicle Services to provide more
effective diagnostic services to our customers, including more efficient working through an improvement in bus
maintenance turnaround times together with fewer mechanical errors. In April, we began operating 31 cutting edge
hybrid-electric buses on behalf of Connecticut Transit.
Across our core business segments we have a strong pipeline of opportunities and continue to make the case for
conversion to outsourcing based on our reputation for delivery and track record of generating efficiencies to reduce
costs for customers. This robust operational and financial performance has contributed several key contract extensions
and renewals including the paratransit call centre in New York City; the contract to provide fixed route and paratransit
service in Yuma, Arizona, after we stepped in to operate at short notice last year and the contract to provide fixed route
services in Pomona, California.
GREYHOUND
As a result of the actions we have taken to transform the network and increase operating leverage Greyhound has
delivered encouraging growth. Like-for-like passenger revenue increased by 3.7% (2010: 1.9%) and revenue was
$556.6m or £343.6m (2010: $513.0m or £337.6m). Operating profit was $49.4m or £30.5m (2010: $39.2, or £25.6m)
and operating margin improved to 8.9%.
We are making Greyhound a more modern and efficient network and delivering improved service quality at the same
time. During the period we added 42 new vehicles to our fleet, with a further 14 new coaches due to enter service in the
autumn for our operations which serve the Hispanic market domestically and internationally along and across the
southwest border with Mexico. We also refurbished a further 100 vehicles, bringing the total to almost 230 to date, and
are significantly improving the passenger experience with amenities including Wi-Fi, at seat power plugs and additional
legroom. By the end of the current financial year we expect that over half the fleet will be new or refurbished to ‘like
new’ standard.
Our customer proposition has been transformed with the launch of Greyhound Express which, following its launch just
11 months ago, accounts for approximately 14% of Greyhound’s total mileage. Passengers are able to travel non-stop
on new or refurbished coaches on high volume routes between major cities and take advantage of yield managed fares
and reserve guaranteed seats online. In addition to the two original Greyhound Express networks serving the Midwest
and Northeast, during the period we also expanded services to the Southeast from a hub in Atlanta, from which we will
launch a further two destinations during November.
We are taking opportunities to right-size and relocate Greyhound’s properties in the US to more appropriate, accessible
and convenient sites for passengers across the network. During the period we completed the sale of our Washington
DC terminal for $46.7m and will relocate our services to the multimodal hub at the city’s Union Station by early 2013.
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In November we launched a national initiative with 7-Eleven and PayNearMe which will open up online fares and
discounts to a new market. From the beginning of November customers without access to credit cards can order their
tickets online and pay in cash at one of 6,400 7-Eleven stores nationwide. This follows a successful three-month trial in
the Dallas area, which saw some 10% of daily internet transactions for the area being completed through 7-Eleven. Last
year we re-launched our web offering through www.greyhound.com and continue to see encouraging growth in sales
from this channel which now represents around 28% of total US ticket purchases. Around 50% of Greyhound’s
customers use cash to pay for their tickets
In Canada we are on track to deliver our profit recovery plan as we continue to right-size our network, reducing
uneconomic routes and condensing the fleet size to a smaller core of refurbished coaches. We are modernising the
network and will launch Greyhound Express in four of the largest cities in Alberta during November. We continue to
develop further opportunities to expand the service.
UK BUS
Our UK Bus division performed steadily during the period. Revenue was £586.9m (2010: £570.5m). Adjusting for the
extra week overall revenue was down 1.2% compared to the same period last year reflecting mileage reductions in the
second half of last year and the softening macroeconomic environment.
During the period passenger revenues, on a like-for-like basis, increased by 1.4%. Operating profit increased by 7.2%
to £59.4m (2010: £55.4m) and operating margin improved to 10.1%. However, looking ahead as the macroeconomic
environment has continued to soften, we anticipate trading conditions will remain challenging as a result of lower
economic activity in the major urban areas where we operate and the impact of reduced funding available to the
industry.
We made further progress in our programme of selective asset and business disposals as part of our strategy to focus
on our core operations in the UK and North America. In April we sold our local bus operations in King’s Lynn and in
September we sold our German subsidiary, which operates approximately 130 buses in the Frankfurt and Heidelberg
area, to Marwyn European Transport plc for a gross consideration of €5.5m.
We remain focused on developing the opportunities that exist to transition to increased growth within our networks,
while retaining our strong cost discipline to manage the immediate challenges presented by the weak economy and
reduced funding as a result of the Comprehensive Spending Review. The UK Bus team is committed to delivering
consistent, efficient and effective services across all our networks and to establishing the platform to achieve increased
growth. During the summer we completed a reorganisation to ensure that our networks are locally managed and
delivered to enable greater focus on our commercial growth plans.
To help equip us for future growth we have committed significant investment over the next two years. We are investing
£160m in approximately 1,000 new vehicles, as well as refurbishing our mid-life vehicles, which will create a step
change to our fleet profile. As part of this investment, we are taking delivery of some 40 hybrid buses for services in
Leeds, Manchester and Glasgow which are partially funded by the Green Bus Funds of the Department for Transport
(DfT) and the Scottish Government. This will enable us to gain good experience of this technology and better
understand the marketing opportunities these vehicles provide.
We are also investing £27m in innovative new ticketing technology for our bus fleet in England, outside London. This
equipment will be installed progressively from November and will accommodate ITSO smartcard. However, the
technology will also allow us, by late 2012, to offer customers "touch in, touch out" contactless payment using their bank
cards. This will allow us to revolutionise the fares transaction, reducing cash payments and speeding up boarding times.
It will also enable us to offer a wide range of ticket products and has the capability to accept payment by mobile phone.
Across a number of our operating areas we have seen a reduction in Local Authority support for tendered services.
Where possible we have worked with those Authorities to mitigate the effects on networks. Additionally, we are working
with a number of Authorities to enable school children to take up spare capacity on commercial services, saving the
Authority the requirement to provide bespoke contracted school services. In the Bristol area where the level of tendered
work has reduced, we have reinvested the mileage saved by enhancing frequencies on our key corridors which have
growth potential. Additionally fares promotions have been introduced and, alongside the delivery of highway
infrastructure improvements by our Local Authority partners as part of the Greater Bristol Bus Network, we have seen
encouraging patronage growth to date this year.
Across all our networks we are introducing simpler fares products through appropriate combinations of flat fares, route
and network tickets. A number of specific fares promotions have been run to stimulate demand. We are encouraged by
the findings from some research we conducted which shows a 35% increase in our customers who now consider our
pricing to demonstrate value for money compared to twelve months ago.
We continue to benefit from developing strong partnerships with Local Authorities across our networks. For example our
partnership with the City and County of Swansea delivered substantial highway infrastructure improvements and
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reduced journey times last year and our ftrmetro service has seen growth of 10% coupled with strong, positive feedback
from customers.
In West Yorkshire we strongly support the Association of Bus Operators' proposal to Metro to deliver bus services
through a wide-ranging partnership which will focus on all aspects of network delivery and customer experience.
Fundamental to this will be a commitment of all the parties; Metro, district councils and the operators, to identify and
agree programmes which will reduce congestion on bus routes and consequently achieve journey time reductions for
users.
In Sheffield, in partnership with South Yorkshire PTE and other operators, we introduced the first of a series of Quality
Partnership Corridors in July. The second corridor was introduced at the end of October. These partnerships enable
coordinated frequencies and inter-available ticketing between operators coupled with service quality commitments and
roadside infrastructure investment.
We are encouraged by our operational performance in London where we deliver better than network average and, on
most measures, are near the top of Transport for London (TfL) league tables. In June we successfully mobilised over
100 additional buses on three new TfL routes from our Lea Interchange depot, which opened last year. We are
delighted that TfL has awarded us funding to purchase 22 hybrid buses for route 23, which will enter service from April
2012.
As previously announced, next year our bus operations will provide spectator transport during the London 2012 Games.
We are providing around 500 buses for shuttle services at Games venues and Park & Ride services from sites around
the edge of London to the Olympic Park as well those for the sailing venue in Weymouth and rowing venue in Eton
Dorney. We will also be operating a network of express coach services from across the country to the Olympic Park and
Weymouth. The contract includes a reservation and ticketing system; as well as support staff at all bus and coach
locations to manage the fleet.
We continue to work closely with the Competition Commission as it completes its inquiry into the local bus services
market outside London. We were pleased that its provisional decision on remedies, published in October, recognised
that no fundamental change to the structure or regulation of the industry was required. We continue to actively engage
with the Commission on the detail of its proposals.
UK RAIL
Our rail companies benefited from continued strong demand, with revenue increased to £1,162.6m (2010: £1,053.1m)
and operating profit increased to £55.7m (2010: £48.4m). Across all of our Train Operating Companies we saw
increased demand with like-for-like passenger revenues increased by 9.0%.
During the period we announced that our First TransPennine Express franchise was extended to April 2015 and First
Capital Connect will be refranchised in 2012/13, with a replacement franchise to commence from September 2013, in
order to facilitate the ongoing delivery of the Thameslink Programme and in particular the introduction of new rolling
stock funded by the DfT. We are one of four pre-qualifying bidders for the InterCity West Coast franchise, which the
Government has announced will be awarded in 2012.
We were pleased to announce in September that Vernon Barker was appointed to the senior management team as
Managing Director of the UK Rail division. Vernon has been the Managing Director of First TransPennine Express since
the Group commenced operation of the franchise in 2004. During this time passenger numbers have grown from 13
million to 24 million per annum and a number of significant improvements in performance, punctuality and customer
satisfaction have been delivered. His proven track record in railway management and strong focus on customer service
will be invaluable as we develop our existing and new rail interests.
We have unrivalled expertise operating different types of franchises and delivering major infrastructure improvements in
partnership with stakeholders. We look forward to building on our market leadership position in rail and developing
further opportunities once the DfT’s new franchising programme commences next year.
First Capital Connect
We continue to focus on improving performance at First Capital Connect (FCC). Our Public Performance Measurement
(PPM) of reliability and punctuality stands at 89.1% on a Moving Annual Average (MAA) basis. We have made
encouraging progress on the Thameslink route however, infrastructure performance on the Great Northern route needs
to improve and we are working with Network Rail, as a high priority, to reduce delays for passengers.
The December timetable change will see longer 12-carriage trains operating four of the peak time services on the
Thameslink route, whereas four-carriage services will reduce from 15 to 11 in the morning peak. In the coming months
refurbishment and transformation work will be finished at Blackfriars, Farringdon and West Hampstead stations. On the
Great Northern route we have added around 6,500 peak seats through our ‘More Seats for You’ initiative.
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We are continuing to work on improving customer information provision, with smartphones issued to staff, customer
information screen updates and PCs available at ticket barriers. Responding to the changing ways in which passengers
like to receive information, we increased our provision of updates through social media including Twitter. We are
pleased that complaints regarding customer information have reduced by 40% year-on-year.
The DfT has announced that the end date for the FCC franchise has been brought forward to September 2013. At FCC
we are working closely with the DfT and Network Rail to successfully deliver the initial phase of the ongoing Thameslink
transformation project. This new end date provides the best opportunity in the programme to allow an effective
transition to a potential new franchisee, particularly in relation to the introduction of new rolling stock which will be
completed after the end date of the current franchise. This major investment is already bringing benefits to passengers
and will transform a key part of London’s transport network. Our unrivalled knowledge and experience of managing this
key project gives us a strong foundation to continue to help deliver this important programme in the future.
First Great Western
Punctuality during the period has been improving with delay minutes down by a third and we continue to challenge
Network Rail to reduce infrastructure failures. Operational performance is below our target with PPM MAA just below
90.0%. As announced in May, we took the commercial decision not to take up our option to extend the franchise for a
further three years from March 2013. We are committed to delivering further improvements for passengers and intend
to bid for the new long-term Greater Western franchise reflecting the changed environment and significant Government
investment in the region.
The Cotswold Line saw an extra 16 miles of track redoubling completed by Network Rail over the summer, allowing us
to run an additional six daily services over the route. From December we will be launching a trial early morning
departure from Charlbury station, via Oxford, arriving at London Paddington by 08:30am. This development is
welcomed by local stakeholders and customers, as are five car park extensions being put into place, funded by Network
Rail and the DfT.
Our £8m programme to improve our Turbo Class 16x fleet, which operates in the London and Thames Valley area, is
now complete. The upgrade to 151 carriages, which carry more than 36 million passengers a year, has led to significant
increases in our customer satisfaction monitor scores, with an eight point improvement in customer views on comfort.
We have also reached agreement with the DfT to introduce six new carriages to the Bristol area, releasing 900
additional seats to commuters in time for the winter timetable.
Six of our routes were named by ATOC in the top ten fastest growing rural branch lines and our work with Community
Rail Partnerships across our network contributed to our achieving ten awards at the Community Rail Awards in
September, as well as overall winner of the “Outstanding Delivery of the Community Rail Strategy” for the second year
in a row.
First ScotRail
First ScotRail (FSR) continues to perform well and deliver improvements in passenger satisfaction. In the Spring 2011
National Passenger Survey 86% of passengers said they were satisfied with FSR’s service, which is above the national
average, and FSR outperformed the average in 30 out of 33 categories. Significant improvements were seen in
categories such as staff helpfulness and attitude, availability of train times and platform information.
Our new 38-strong fleet of Class 380 electric trains from the Scottish Government are now all in service, running
between Glasgow Central and Ayrshire; Inverclyde and Renfrewshire, and Edinburgh to North Berwick and Dunbar. We
have a £4m project to refurbish the Class 334 fleet starting in November, creating additional jobs in Ayrshire. Across our
fleet we continue to invest to improve reliability and comfort.
We have invested in CCTV and help points across the network, reducing crime for the seventh year in a row, whilst the
installation of ticket barriers at five central Glasgow stations will help reduce lost revenue. The implementation of our
winter weather schemes last year reduced train failures by 30% and led to a win at the Railway Innovation Awards. As
well as the heated train 'skirts' and polytunnels introduced last year, this winter we are using a system of hot water
sprinklers to remove snow and ice from undercarriages quickly.
FSR and Network Rail are developing a pioneering alliance framework agreement in order to better align overall
objectives, deliver value for money and increase focus on passenger requirements. We are agreeing a joint programme
of projects with Network Rail and are working more closely than ever before on a number of issues including timetabling
and winter preparation. It is expected that the alliance framework will include simplification of station and depot repair
and management and the establishment of joint Scotland control and performance teams.
First TransPennine Express
We were delighted that the DfT took the decision to extend First TransPennine Express (FTPE). We will operate the
franchise for a further three years from February 2012 at an operating margin closer to the industry average. Since we
started operating the franchise in 2004 we have delivered a number of improvements including the introduction of a
£260m new train fleet and passenger numbers have grown from 13 million to 24 million per annum. We will work closely
9
with the DfT and our stakeholders in the region over the remaining time of the franchise to develop plans for the future
of rail in the north of England and to further develop the Anglo-Scottish services.
Our PPM MAA is above the national average at 91.1% and we achieved a passenger satisfaction rating of 89% in the
National Passenger Survey. This is a record score for FTPE and a 15% improvement since the start of the franchise.
Passenger growth has been aided by advance purchase fares offering greater value-for-money journeys. Over 10
million people in the region will have seen FTPE advertising on television and ticket sales through our website
www.tpexpress.co.uk, which increased by 85% in the year to March 2011, are continuing to grow. FTPE also launched
a GPS-enabled mobile website during the period, giving customers an additional way of accessing train information. We
were pleased that 91% of passengers surveyed say that they are pleased with the way that FTPE communicates.
First Hull Trains
First Hull Trains topped the National Passenger Survey with an overall customer satisfaction score of 95%. We
launched our refreshed Class 180 fleet in May and our trains now offer free on-board Wi-Fi, at seat power sockets,
leather seats in First Class and improved catering and have been well received by passengers.
6 months to 6 months to Year to
Exceptional items and amortisation 30 September 30 September 31 March
charges 2011 2010 2011
£m £m £m
UK Bus Pension Scheme changes 73.3 - -
UK Rail bid costs (2.1) - (2.7)
Competition Commission costs (1.0) - (1.4)
UK Rail First Great Western contract provision - - (59.9)
First Student recovery plan - - (39.5)
First Transit goodwill impairment and contract provision - - (16.6)
UK Rail claim - 22.5 22.5
UK Rail joint venture provision - - (1.8)
UK Bus restructuring costs - - (1.0)
Other exceptional items (1.1) (0.2) (0.4)
Total exceptional items 69.1 2 2.3 (100.8)
Amortisation charges (15.1) (17.7) (42.9)
Loss on disposal of properties (0.7) (1.5) (4.4)
Operating profit credit/(charge) 53.3 3.1 (148.1)
Ineffectiveness on financial derivatives (10.0) 1.2 0.3
Profit before tax credit/(charge) 43.3 4.3 (147.8)
Tax (charge)/credit (9.2) 0.3 43.0
(Loss)/profit on disposal of discontinued operations (9.2) 6.7 6.7
Exceptional items for the period 24.9 11.3 (98.1)
UK Bus Pension Scheme changes
During the period certain changes were agreed in principle with the participating members and the Scheme trustees the
most significant of which is that pension increases will be linked to consumer price inflation (CPI) rather than retail price
inflation (RPI). As a result of these changes future pension liabilities have decreased and a one-off exceptional gain of
£73.3m (2010: £nil) was realised.
UK Rail bid costs
Costs of £2.1m (2010: £nil) were incurred during the year principally on preparatory work on our bid for the Intercity
West Coast franchise.
Competition Commission costs
Costs of £1.0m (2010: £nil) were incurred on the ongoing Competition Commission investigation into the UK Bus
market.
Other exceptional items
Costs of £1.1m (2010: £0.2m) were incurred principally on effecting the changes to the UK Bus Pension Scheme as
described above.
Amortisation charges
The charge for the period was £15.1m (2010: £17.7m) with the reduction principally due to fully writing off the remaining
First Great Western intangible in the year to 31 March 2011.
10
Loss on disposal of properties
A loss on disposal of properties of £0.7m (2010: £1.5m) was recorded during the period. A Greyhound property in
Washington was sold which generated a small gain but this was more than offset by losses on disposals in UK Bus and
First Student.
Ineffectiveness on financial derivatives
The principal component of the £10.0m non-cash charge (2010: £1.2m credit) relates to fixed interest rate swaps which
do not qualify for hedge accounting but do provide a cash flow hedge against variable rate debt from 2012 to 2015. It is
anticipated that the charge in respect of these swaps will reverse over their contractual term.
Tax
The tax charge as a result of these exceptional items was £9.2m (2010: credit of £0.3m).
FINANCE COSTS AND INVESTMENT INCOME
Net finance costs, before exceptional items, were £78.5m (2010: £92.9m) with the reduction principally due to lower
interest rates on US Dollar denominated debt.
PROFIT BEFORE TAX
Adjusted profit before tax was £84.5m (2010: £77.5m) with the increase due principally to lower net finance costs partly
offset by lower adjusted operating profit. An overall credit of £43.3m (2010: £4.3m) for exceptional items and
amortisation charges resulted in statutory profit before tax of £127.8m (2010: £81.8m).
TAX
The tax charge, on adjusted profit before tax, for the period was £18.8m (2010: £19.3m) and is based on the estimated
effective rate for the year of 22.3% (2010: 25.0%). The tax charge of £9.2m (2010: credit of £0.3m) relating to
amortisation charges and exceptional items resulted in a total tax charge of £28.0m (2010: £19.0m) on continuing
operations.
The actual tax paid during the period was £4.3m (2010: £9.8m). North American cash tax remains low due to tax losses
brought forward and tax depreciation in excess of book depreciation. We expect the North American cash tax rate to
remain low for the near term.
DISCONTINUED OPERATIONS
A loss on disposal of £9.2m arose on the sale of FirstGroup Deutschland GmbH representing gross consideration of
€5.5m less the carrying value of net assets, including goodwill, and transaction costs. This, as well as the operating
loss after tax to the date of disposal of £0.3m (2010: profit of £0.3m), has been classified within discontinued operations
in the consolidated income statement.
DIVIDENDS
The interim dividend per ordinary share of 7.62p (2010: 7.12p) represents an increase of 7.0%. The interim dividend
will be paid on 1 February 2012 to shareholders on the register of members at the close of business on 6 January 2012.
EPS
The adjusted basic EPS was 11.2p (2010: 10.5p), an increase of 6.7%. Basic EPS was 18.3p (2010: 11.4p), an
increase of 60.5%.
EBITDA
EBITDA by division is set out below:
Revenue EBITDA1 EBITDA1
Revenue EBITDA1 EBITDA1
Revenue EBITDA1 EBITDA1
£m £m % £m £m % £m £m %
First Student 683.3 7 9.9 11.7 711.4 1 05.3 1 4.8 1 ,594.4 2 78.1 1 7.4
First Transit 387.3 3 1.7 8.2 392.7 3 0.8 7 .8 7 71.5 6 6.3 8 .6
Greyhound 343.6 4 5.4 13.2 337.6 4 0.3 1 1.9 6 34.6 6 8.7 1 0.8
UK Bus 586.9 9 6.5 16.4 570.5 9 1.5 1 6.0 1 ,137.5 2 20.5 1 9.4
UK Rail 1,162.6 8 4.6 7.3 1,053.1 7 4.9 7 .1 2 ,269.8 1 66.1 7 .3
Group 5 .1 (14.7) - 4 .6 (11.5) - 8 .9 (22.8) -
Total Group 3,168.8 3 23.4 10.2 3,069.9 3 31.3 1 0.8 6 ,416.7 7 76.9 1 2.1
6 months to 30 September 2011² 6 months to 30 September 2010 Year to 31 March 2011
1Adjusted operating profit plus depreciation.
²For all businesses excluding UK Rail this half year includes 27 weeks compared to 26 weeks for the corresponding period last year
11
CASH FLOW
The net cash outflow was £64.2m (2010: £15.7m) for the half year. This contributed to a net debt increase of £109.3m
(2010: reduction of £90.7m) as detailed below:
6 months to 6 months to Year to
30 September 30 September 31 March
2011 2010 2011
£m £m £m
Operational cash flows before working capital 394.8 358.6 708.8
Working capital (26.5) (16.4) 78.4
Movement in provisions (46.2) (30.2) 0.4
Pension payments in excess of income statement charge (117.8) (14.8) (43.5)
Cash generated by operations 204.3 297.2 744.1
Capex and acquisitions (91.8) (147.2) (261.8)
Interest and tax (102.5) (117.9) (186.7)
Dividends (79.7) (72.1) (113.2)
Proceeds from sale of business 5 .5 24.3 24.3
Other - - 3.1
Net cash (outflow)/inflow (64.2) (15.7) 209.8
Foreign exchange movements (42.6) 109.7 129.2
Other non-cash movements in relation to financial instruments (2.5) (3.3) (6.9)
Movement in net debt in period (109.3) 90.7 332.1
The reduction in net cash flow was primarily due to:
• Higher pension payments in excess of income statement charge of £103.0m principally due to the non-cash
exceptional gain in relation to the UK Bus Pension Scheme changes and additional cash contributions in Greyhound.
• Working capital and movements in provisions outflows unfavourable by £26.1m principally caused by higher
receivables due to the extra week of trading in North America and UK Bus.
• Lower proceeds from sale of business of £18.8m due to the sale of GB Railfrieght in the prior period.
• Higher dividend payments of £7.6m.
partly offset by:
• Lower capital expenditure and acquisitions of £55.4m principally due to reduced spend in UK Bus, First Student and
Greyhound, greater use of operating leases in UK Bus and higher disposal receipts.
• Operating cash flows before working capital being £36.2m higher principally due to the exceptional gain in relation to
the UK Bus Pension Scheme changes partly offset by the NR settlement in the prior period.
• Lower tax and interest payments of £15.4m principally due to lower interest rates on US Dollar denominated debt.
NET DEBT
The Group’s net debt at 30 September 2011 was £2,058.7m (2010: £2,190.8m) and comprised:
30 September 30 September 31 March
2011 2010 2011
Fixed Variable Total Total Total
Analysis of net debt £m £m £m £m £m
Sterling bond (2013)1
298.5 - 2 98.5 298.0 298.0
Sterling bond (2018)2
335.8 - 3 35.8 330.3 325.9
Sterling bond (2019)2
- 268.9 2 68.9 277.1 273.4
Sterling bond (2021)3
335.2 - 3 35.2 332.9 331.1
Sterling bond (2024)1
199.0 - 1 99.0 199.0 199.0
Sterling bank loans - 25.0 2 5.0 - -
US Dollar bank loans - 398.3 3 98.3 698.7 506.3
Canadian Dollar bank loans - 119.7 1 19.7 130.8 113.1
Euro and other bank loans - 17.2 1 7.2 29.6 29.0
HP contracts and finance leases 213.1 73.4 2 86.5 219.4 251.9
Senior unsecured loan notes 95.9 - 9 5.9 - -
Other loan notes 8.7 1.0 9 .7 9.7 9.7
Cash - (81.3) (81.3) (99.5) (89.4)
UK Rail ring-fenced cash and deposits - (233.6) (233.6) (219.3) (283.8)
Other ring-fenced cash and deposits - (16.1) (16.1) (15.9) (14.8)
Interest rate swaps 385.0 (385.0) - - -
Total 1,871.2 187.5 2,058.7 2,190.8 1,949.4 1 Excludes accrued interest
2 Stated excluding accrued interest, swapped to US Dollars and adjusted for movements on associated derivatives
3 Stated excluding accrued interest, partially swapped to US Dollars and adjusted for movements on associated derivatives
12
Average debt maturity at the end of the period was 5.9 years (2010: 5.6 years). Liquidity headroom under the
committed $1.25bn syndicated bank revolver at 30 September 2011 was £601m (2010: £934m).
Leverage reduction is a key priority. At 30 September 2011 the net debt to EBITDA ratio was 2.7 times (2010: 2.8
times).
SHARES IN ISSUE
As at 30 September 2011 there were 481.4m shares in issue (2010: 480.4m), excluding treasury shares and own
shares held in trust for employees of 0.7m (2010: 1.7m). 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) was 481.2m
(2010: 480.3m).
BALANCE SHEET
Net assets have decreased by £128.8m since the start of the year. The principal reasons for this are actuarial losses
on defined benefit pension schemes (net of deferred tax) of £92.0m, dividends paid and proposed of £86.4m and
unfavourable hedging reserve movements of £67.4m partly offset by the retained profit for the period of £90.3m and
favourable translation reserve movements of £24.4m.
INVESTMENT IN DSBFIRST
The funding of the joint venture was agreed with DSB during the period and a further £4.2m was invested by the Group.
As a result of this the guarantees issued by the Group reduced to £7.0m. It is anticipated that the Swedish franchise
will transfer to another operator at the end of the calendar year and that, based on current financial projections, this
investment will be recovered at the end of the Danish franchise.
FOREIGN EXCHANGE
The most significant exchange rates to Sterling for the Group are as follows:
6 months to 6 months to Year to
30 September 30 September 31 March
Closing Effective Closing Effective Closing Effective
rate rate rate rate rate rate
US Dollar 1.56 1.62 1.58 1.50 1.60 1.56
Canadian Dollar 1.64 1.59 1.62 1.44 1.57 1.56
2011 2010 2011
PENSIONS
The Group has updated its pension assumptions as at 30 September 2011 for the defined benefit schemes in the UK
and North America.
The net pension deficit of £243m at the beginning of the period has increased to £261m at the end of the period
principally due to actuarial losses as a result of changes in assumptions and lower than expected returns on assets
partly offset by the one-off benefit of the changes to the UK Bus Scheme described above and higher cash payments
into the schemes.
The main factors that influence the balance sheet position for pensions and the sensitivities to their movement at 30
September 2011 are set out below:
Movement Impact
Discount rate +0.1% Reduce deficit by £24m
Inflation +0.1% Increase deficit by £15m
FUEL HEDGING
For the current year 84% of UK “at risk” crude volumes (2.6m barrels) and 59% of North American “at risk” volumes
(1.7m barrels) are hedged at $88 and $95 respectively.
For 2012/13 “at risk” crude volumes, the UK is 65% hedged at $101 per barrel and North America is 48% hedged at
$93 per barrel.
SEASONALITY
The First Student business generates lower revenues and profits in the first half of the year than in the second half of
the year as the school summer holidays fall into the first half. Greyhound operating profits are typically higher in the first
half of the year due to demand being strongest in the summer months.
13
PRINCIPAL RISKS AND UNCERTAINTIES FOR THE REMAINING SIX MONTHS OF THE FINANCIAL YEAR
There are a number of risks and uncertainties facing the Group in the remaining six months of the financial year. These
are considered to be the same as disclosed in the 2011 Annual Report. The principal risks and uncertainties, which are
set out in detail on pages 40 to 42 of the Annual Report and Accounts 2011, are:
• Economy in the UK and North America
• Pension assets and liabilities valuations
• Customer service and associated contract retention
• Competitive pressures
• Legislation and regulation
• Labour costs and employee relations
• Unhedged fuel costs
• Treasury risks and insurance costs
• Terrorism
• Rail franchise agreements
• Retention of key management
• Environmental
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance with IAS 34 “Interim Financial
Reporting”;
• the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of principal risks and uncertainties for the remaining six
months of the year); and
• the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related
parties’ transactions and changes therein).
OUTLOOK
We remain focused on cash generation to support capital investment, debt reduction and dividend growth. We continue
to target a net cash inflow of £150m for 2011/12 including further selective asset and business disposals.
With market leading positions and operations that are fundamentally strong, together with our clear focus on creating a
stronger business for the future, the Group has good prospects to deliver long-term value for shareholders in a sector
which is a key enabler of economic growth.
Tim O’Toole Jeff Carr
Chief Executive Finance Director
8 November 2011 8 November 2011
14
Condensed consolidated income statement
For the 6 months to 30 September based on unaudited figures
Year to 31 March
2011
Adjusted Adjusted
results1 Adjustments2
Total results1 Adjustments2
Total Total
Notes £m £m £m £m £m £m £m
Continuing operations
Revenue 2,3 3,168.8 - 3,168.8 3,069.9 - 3,069.9 6,416.7
Operating costs before loss on disposal of properties (3,005.8) 54.0 (2,951.8) (2,899.5) 4.6 (2,894.9) (6,103.7)
Operating profit before loss on disposal of
properties 163.0 54.0 217.0 170.4 4.6 175.0 313.0
Amortisation charges - (15.1) (15.1) - (17.7) (17.7) (42.9)
Exceptional items - 69.1 69.1 - 22.3 2 2.3 (100.8)
- 54.0 54.0 - 4.6 4 .6 (143.7)
Loss on disposal of properties - (0.7) (0.7) - (1.5) (1.5) (4.4)
Operating profit 3 163.0 53.3 216.3 170.4 3.1 173.5 308.6
Investment income 4 0 .8 - 0 .8 0 .7 - 0 .7 1.9
Finance costs 4 (79.3) (10.0) (89.3) (93.6) 1.2 (92.4) (184.0)
Profit before tax 8 4.5 43.3 127.8 7 7.5 4.3 81.8 126.5
Tax 5 (18.8) (9.2) (28.0) (19.3) 0.3 (19.0) (16.7)
Profit for the period from continuing operations 6 5.7 34.1 99.8 5 8.2 4.6 62.8 109.8
Discontinued operations
(Loss)/profit for the period from discontinued
operations 6 (0.3) (9.2) (9.5) 0 .3 6.7 7 .0 7.3
Profit for the period 65.4 24.9 90.3 5 8.5 11.3 6 9.8 117.1
Attributable to:
Equity holders of the parent 53.5 25.0 78.5 50.4 11.4 61.8 103.2
Non-controlling interests 11.9 (0.1) 11.8 8.1 (0.1) 8.0 13.9
65.4 24.9 90.3 58.5 11.3 69.8 117.1
Earnings per share
Continuing operations
Basic 8 11.2p 7.1p 18.3p 10.5p 0.9p 11.4p 20.0p
Diluted 11.1p 7.1p 18.2p 10.3p 1.0p 11.3p 19.8p
Continuing and discontinued operations
Basic 8 11.1p 5.2p 16.3p 10.5p 2.4p 12.9p 21.5p
Diluted 11.1p 5.2p 16.3p 10.4p 2.3p 12.7p 21.3p
6 months to 30 September 2011³ 6 months to 30 September 2010
1Adjusted trading results before items noted in 2 below.
2Amortisation charges, ineffectiveness on financial derivatives, exceptional items, loss on disposal of properties and (loss)/profit on disposal of discontinued
operations and tax thereon.
³For all businesses excluding UK Rail this half year includes 27 weeks compared to 26 weeks for the corresponding period last year.
15
Condensed consolidated statement of comprehensive income
Unaudited
6 months to
30 September
2011
Unaudited
6 months to
30 September
2010
Audited
year to
31 March
2011
£m £m £m
Profit for the period 90.3 69.8 117.1
Other comprehensive income
Derivative hedging instrument movements (91.8) 74.7 193.4
Deferred tax on derivative hedging instrument movements 24.4 (10.1) (44.0)
Exchange differences on translation of foreign operations 24.4 (135.8) (143.9)
Unrealised losses on executive deferred compensation plans - (0.3) (0.1)
Actuarial losses on defined benefit pension schemes (135.8) (116.3) (55.5)
RPI to CPI change in defined benefit pension schemes - 70.2 84.9
Deferred tax on actuarial losses and RPI to CPI change on defined benefit pension
schemes 43.8 16.6 (5.9)
Other comprehensive income for the period (135.0) (101.0) 28.9
Total comprehensive income for the period (44.7) (31.2) 146.0
Attributable to:
Equity holders of the parent (56.2) (38.6) 132.6
Non-controlling interests 11.5 7.4 13.4
(44.7) (31.2) 146.0
16
Condensed consolidated balance sheet
Unaudited
30 September
2011
Unaudited
30 September
2010
Audited
31 March
2011
Notes £m £m £m
Non-current assets
Goodwill 9 1,634.7 1,623.8 1,608.0
Other intangible assets 10 338.9 375.7 348.6
Property, plant and equipment 11 2,041.7 2,154.8 2,082.9
Deferred tax assets 53.0 31.6 30.0
Retirement benefit assets 20 32.5 11.6 30.7
Derivative financial instruments 15 65.4 57.1 58.1
Investments 7.4 4.6 3.2
4,173.6 4,259.2 4,161.5
Current assets
Inventories 90.0 91.4 91.4
Trade and other receivables 12 620.1 576.2 555.5
Cash and cash equivalents 331.0 334.7 388.0
Assets held for sale 13 7.7 2.4 4.6
Derivative financial instruments 15 30.5 26.9 65.1
1,079.3 1,031.6 1,104.6
Total assets 5,252.9 5,290.8 5,266.1
Current liabilities
Trade and other payables 14 1,185.5 1,041.7 1,129.9
Tax liabilities 59.4 51.5 49.0
Financial liabilities - bank loans 96.3 181.6 93.5
- bonds 35.7 35.6 73.3
- HP contracts and finance leases 46.0 38.4 42.8
Derivative financial instruments 15 41.4 82.9 38.5
1,464.3 1,431.7 1,427.0
Net current liabilities 385.0 400.1 322.4
Non-current liabilities
Financial liabilities - bank loans 464.0 677.6 554.9
- bonds 1,439.1 1,430.8 1,417.1
- HP contracts and finance leases 240.5 181.0 209.1
- loan notes 9.7 9.7 9.7
- senior unsecured loan notes 95.9 - -
Derivative financial instruments 15 84.6 59.2 29.7
Retirement benefit liabilities 20 293.7 361.2 273.9
Deferred tax liabilities 69.2 63.6 93.0
Provisions 16 269.8 263.9 300.8
2,966.5 3,047.0 2,888.2
Total liabilities 4,430.8 4,478.7 4,315.2
Net assets 822.1 812.1 950.9
Equity
Share capital 18 24.1 24.1 24.1
Share premium 676.4 676.4 676.4
Hedging reserve (32.0) (49.4) 35.4
Other reserves 4.6 4.6 4.6
Own shares (2.2) (6.1) (5.0)
Translation reserve 181.2 164.8 156.6
Retained earnings (44.5) (20.5) 41.5
Equity attributable to equity holders of the parent 807.6 793.9 933.6
Non-controlling interests 14.5 18.2 17.3
Total equity 822.1 812.1 950.9
17
Condensed consolidated statement of changes in equity
Non-
Share Share Hedging Other Own Translation Retained controlling Total
capital premium reserve reserves shares reserve earnings Total interests equity
£m £m £m £m £m £m £m £m £m £m
Balance at 1 April 2011 24.1 6 76.4 35.4 4 .6 (5.0) 1 56.6 41.5 9 33.6 17.3 9 50.9
Total comprehensive income for the period - - (67.4) - - 2 4.6 (13.4) (56.2) 11.5 (44.7)
Dividends paid - - - - - - (72.1) (72.1) (14.3) (86.4)
Movement in EBT and treasury shares - - - - 2.8 - (3.0) (0.2) - (0.2)
Share-based payments - - - - - - 2.8 2 .8 - 2 .8
Deferred tax on share-based payments - - - - - - (0.3) (0.3) - (0.3)
Balance at 30 September 2011 24.1 6 76.4 (32.0) 4 .6 (2.2) 1 81.2 (44.5) 8 07.6 14.5 8 22.1
Balance at 1 April 2010 24.1 6 76.4 (114.0) 4 .6 (6.5) 3 00.0 10.2 8 94.8 15.7 9 10.5
Total comprehensive income for the period - - 64.6 - - (135.2) 32.0 (38.6) 7.4 (31.2)
Dividends paid - - - - - - (67.2) (67.2) (4.9) (72.1)
Movement in EBT and treasury shares - - - - 0.4 - (0.5) (0.1) - (0.1)
Share-based payments - - - - - - 3.9 3 .9 - 3 .9
Deferred tax on share-based payments - - - - - - 1.1 1 .1 - 1 .1
Balance at 30 September 2010 24.1 6 76.4 (49.4) 4 .6 (6.1) 1 64.8 (20.5) 7 93.9 18.2 8 12.1
Balance at 1 April 2010 24.1 6 76.4 (114.0) 4 .6 (6.5) 3 00.0 10.2 8 94.8 15.7 9 10.5
Total comprehensive income for the period - - 1 49.4 - - (143.4) 126.6 1 32.6 13.4 1 46.0
Dividends paid - - - - - - (101.4) (101.4) (11.8) (113.2)
Movement in EBT and treasury shares - - - - 1.5 - (1.7) (0.2) - (0.2)
Share-based payments - - - - - - 7.7 7 .7 - 7 .7
Deferred tax on share-based payments - - - - - - 0.1 0 .1 - 0 .1
Balance at 31 March 2011 24.1 6 76.4 35.4 4 .6 (5.0) 1 56.6 41.5 9 33.6 17.3 9 50.9
18
Condensed consolidated cash flow statement
Unaudited
6 months to
30 September
2011
Unaudited
6 months to
30 September
2010
Audited
year to
31 March
2011
Note £m £m £m
Net cash from operating activities 19 101.1 178.4 555.7
Investing activities
Interest received 0.7 0.9 1.7
Proceeds from disposal of property, plant and equipment 29.9 13.4 21.8
Purchases of property, plant and equipment (65.8) (142.1) (210.3)
Disposal of subsidiary 5.5 24.3 24.3
Acquisition of businesses - - (3.1)
Net cash used in investing activities (29.7) (103.5) (165.6)
Financing activities
Monies received on exercise of share options - - 3.1
Dividends paid (72.1) (67.2) (101.4)
Dividends paid to non-controlling shareholders (7.6) (4.9) (11.8)
Proceeds from senior unsecured loan notes 90.2 - -
Proceeds from bank facilities 36.0 105.4 124.1
Repayment of bank debt (146.7) (86.7) (307.7)
Repayments under HP contracts and finance leases (26.7) (19.5) (35.9)
Repayment of loan notes - (0.8) (0.8)
Fees for bank facility amendments and bond issues (1.5) (0.2) (6.3)
Net cash flow from financing activities (128.4) (73.9) (336.7)
Net (decrease)/increase in cash and cash equivalents before foreign
exchange movements (57.0) 1.0 53.4
Cash and cash equivalents at beginning of period 388.0 335.0 335.0
Foreign exchange movements - (1.3) (0.4)
Cash and cash equivalents at end of period per condensed
consolidated balance sheet 331.0 334.7 388.0
Cash and cash equivalents are included within current assets on the condensed consolidated balance sheet.
Note to the condensed consolidated cash flow statement -
reconciliation of net cash flow to movement in net debt
6 months to
30 September
2011
6 months to
30 September
2010
Year to
31 March
2011
£m £m £m
Net (decrease)/increase in cash and cash equivalents in period (57.0) 1.0 53.4
Decrease in debt and finance leases 47.2 1.6 220.3
Inception of new HP contracts and finance leases (55.9) (18.5) (70.2)
Fees capitalised against bank facilities and bond issues 1.5 0.2 6.3
Net cash flow (64.2) (15.7) 209.8
Foreign exchange movements (42.6) 109.7 129.2
Other non-cash movements in relation to financial instruments (2.5) (3.3) (6.9)
Movement in net debt in period (109.3) 90.7 332.1
Net debt at beginning of period (1,949.4) (2,281.5) (2,281.5)
Net debt at end of period (2,058.7) (2,190.8) (1,949.4)
Net debt includes the value of derivatives in connection with the bonds maturing in 2018, 2019 and 2021 and excludes
all accrued interest. These bonds are included in non-current liabilities in the condensed consolidated balance sheet.
19
Notes to the half-yearly financial report
1 BASIS OF PREPARATION
This half-yearly financial report does not constitute statutory accounts as defined in section 434 of the Companies Act
2006. The statutory accounts for the year ended 31 March 2011 have been delivered to the Registrar of Companies.
The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The figures for the six months to 30 September 2011 include the results of the rail division for the period ended 17
September 2011 and the results for the other divisions for the 27 weeks ended 1 October 2011. The comparative
figures for the six months to 30 September 2010 include the results of the rail division for the period ended 18
September 2010 and the results of the other divisions for the 26 weeks ended 25 September 2010.
The accounting policies used in this half-yearly financial report are consistent with International Financial Reporting
Standards. The same accounting policies, presentation and methods of computation are followed in this condensed set
of financial statements as applied in the Group’s latest annual audited financial statements.
The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, “Interim Financial Reporting”, as adopted by the European Union.
These results are unaudited but have been reviewed by the auditors. The comparative figures for the six months to 30
September 2010 are unaudited and are derived from the half-yearly financial report for that period, which was also
reviewed by the auditors.
There continue to be no significant debt repayments due until 2013. After taking this into account and the committed
liquidity headroom available under the $1.25bn committed revolver facility and making enquiries and reviewing the
outlook
Suzy Scott
Dundee, Scotland, UK
Forum Administrator (and founder) of A&TVBF and DABF

Find all my current and recent photos at ScotBus online! Update Pending