Embargoed until 7:00am on Tuesday 9 April 2013
FIRSTGROUP PLC
PRE-CLOSE TRADING UPDATE
FirstGroup plc (“the Group”) reports the following update on trading for its financial year ended 31 March
2013 (“the year” or “the period”), ahead of its preliminary results due to be announced on 22 May 2013.
Summary
Overall trading in line with management’s expectations
Sale of eight UK Bus depots in London for a combined consideration of approximately £80m after the
period
Recovery programmes in First Student and UK Bus on track
First Transit achieved strong contract performance and sale of Support Services, consistent with
strategy to focus on core businesses
Greyhound Express continues to expand, offsetting the impact of the weaker economy
Continued strong passenger volume and revenue growth in UK Rail
Overview
Overall trading for the Group during the period is in line with management’s expectations. Despite the
challenging economic conditions that prevail, we continue to strengthen the business for the future. As
previously stated the Board held the interim dividend at last year's level, following the uncertainty caused by
the DfT's decision to delay rail re-franchising, and will consider the full year dividend in May 2013.
First Student
Trading, excluding the previously reported one-off effect of Hurricane Sandy in October 2012, has developed
in line with our expectations although we saw further periods of severe weather disruption in early 2013.
US Dollar revenues are expected to be reduced by 2.9% on a like-for-like basis, with our expectations for
underlying margin performance for the year broadly unchanged. This year’s bidding season is on plan with a
number of new contract wins. As we work through our plans to reform the operating model we continue to
implement a series of actions, such as the recent roll out of a comprehensive operating guide which is
achieving consistency and greater efficiency across our 600 locations.
First Transit
We continue to see good operating results in our First Transit division, particularly from our core operations.
US Dollar revenues for the division are expected to grow by 7.1% on a like-for-like basis for the ongoing
business and we anticipate that full-year margins will remain in line with our expectations. First Transit has
established a market leading position with unrivalled expertise across many areas. It is this reputation and
credibility that is key to retaining and winning contracts of significant scale including a US$48m Fixed Route
contract in Phoenix, Arizona; a US$22m Paratransit contract in Washington DC and a US$22m Paratransit
contract in Maryland, all of which we were awarded during the period. On 8 March we completed the sale of
First Support Services, our military base facility management business, to Parsons Government Services for a
gross consideration of US$10.2m. As previously indicated, we are proactively working through historic legal
cases and have now settled meal and break claims, dating back to 2003, for approximately £8m.
Greyhound
Greyhound is seeing some effects from continuing softness in the US economy. Like-for-like revenue during
the period is expected to increase by 1.1%. As a result of actions we have taken to create a more flexible
and agile operating model, we have been able to reduce the impact of a weak economic backdrop and lower
consumer confidence, with anticipated operating margin performance in line with our expectations. During
the period we expanded our popular Greyhound Express product to new markets in British Columbia, Florida, Illinois, Kentucky and Tennessee. The Express service complements our national network, the only
one of its kind, which is uniquely placed to support the launch of new routes by providing sustainable
passenger flows.
UK Bus
We are working through our comprehensive plan to recover performance and equip our UK Bus business to
achieve sustainable revenue and patronage growth, and are seeing early positive signs in some of our
markets. During the period we achieved steady growth with like-for-like passenger revenue expected to
increase by 2.4%. As previously stated, we expect the full year operating margin to be approximately 8%.
In line with our strategy to pursue selected business and asset disposals, today we are pleased to announce
the sale of five of our London depots to Metroline, an existing London bus operator, and three of our London
depots to Transit Systems Group, an Australian transport company, for a combined consideration of
approximately £80m. Both disposals are subject to the necessary regulatory approvals including contractual
obligations with Transport for London.
UK Rail
During the period we continued to benefit from strong passenger volume growth across all of our franchises
with like-for-like revenue expected to increase by 7.4%. On 31 January the Department for Transport (DfT)
announced its intention to exercise the 28-week extension clauses in the existing contracts of our First
Capital Connect and First Great Western franchises. Further extensions of six months for First Capital
Connect and 33 months for First Great Western, as well as ten months for First TransPennine Express, were
announced on 26 March. We are currently in negotiation with the DfT in respect of the terms for these
extensions. As the UK’s largest and most experienced rail operator we remain committed to maintaining a
leading position in the market. We look forward to reviewing the details of the new franchise competitions,
and submitting further high quality bids.
Outlook
Commenting, Tim O’Toole, Chief Executive said:
“Trading during the period is in line with our expectations. Although there remains significant work still to
be done, we are satisfied with the progress made so far. While remaining cautious in respect of continued
challenging economic conditions, we are confident the actions we are taking will position the business to
generate sustainable growth and improved returns.
“Public transport is a key enabler of economic growth and the private sector is best placed to deliver high
quality and attractive services that represent value for passengers and taxpayers and provide an economic
return for shareholders. With leading positions across all of our markets, we are well placed to leverage our
scale whilst developing our global expertise and resource and bringing them to bear at the local level for the
benefit of our customers and our stakeholders.”
