Embargoed until 7:00am on Tuesday 9 April 2013
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.
* 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
* Continued strong passenger volume and revenue growth in UK Rail
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.
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
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 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.
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
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.
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
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
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