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." A conference call for analysts and investors will be held at 9:00am today. Please call +44 20 7291 0507 in advance of the call to register and to receive joining details. Contacts at FirstGroup: Chris Surch, Group Finance Director Rachael Borthwick, Group Corporate Communications Director Tel: + 44 20 7291 0512 / +44 7771 945 432 Stuart Butchers, Group Corporate Communications Manager Tel: + 44 20 7291 0507 / +44 7713 317 979 Brunswick PR: Michael Harrison/Andrew Porter Tel: +44 207 404 5959 FirstGroup plc is the leading transport operator in the UK and North America. With approximately 124,000 employees we carry 2.5 billion passengers every year across our bus and rail networks in the UK and our school bus, transit and intercity coach operations in the US and Canada. Our vision is to provide solutions for an increasingly congested world...keeping people moving and communities prospering. END -0- Apr/09/2013 06:00 GMT
FIRSTGROUP PLC: Trading Statement
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