FirstGroup posts positive financial year results

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Group says transformation plan is delivering improved financial performance

FirstGroup has released its preliminary results for the year ended March 31, 2015.

Although revenue was down 9.9% at £6,050.7m, the remainder of the results looked positive. EBITDA increase by 7.7% to £624.4m, while operating profile was up 5.9% at £245.8m. Statutory profit before tax saw an significant increase of 80.9% to £105.8% over 2014’s figure of £58.5m. Attributable profit was up 38.7% at £75.2m, while earnings per share increased by 21.6% to 6.2p.

The group’s net debt also increased by 7.9% to £1,407.3m.

In North America, First Student saw revenue growth of 1.3%, with operating profit at £114.9m (2014: £93.5m). First Transit saw revenue increase by £32.9m to £844.8m, though profit dropped slightly to £59.7m (2014: £60.3m). Greyhound struggled to keep up with the other North American businesses, with revenue down at £609.6m (2014: £624.6m) and operating profit down £4.7m at £41.7m.

First UK Bus saw revenues fall to £896.1m (2014: £930.2m) while operating profit increased to £51.8m (2014: £44.4m) with the margin improving by 1% to 5.8%. Like-for-like passenger volumes increased by 1.1%, with commercial passenger growth up 2.6%. Concession volumes were ‘modestly lower.’

First’s UK Rail business saw operating margin increase from 1.9% to 3.4% and operating profit at £74.1m (2014: £55.2m). Like-for-like passenger volumes increased 4.2% in the year, but revenue was down significantly at £2,207.1m (2014: £2,870.1m). This was due to the loss of the First Capital Connect and First ScotRail franchises.

FirstGroup CEO Tim O’Toole commented: “Overall trading for the year is in line with our expectations and our transformation plan is beginning to deliver improving financial performance, though clearly much hard work remains ahead of us.

“The pricing improvements we made in the 2014 bid season together with further cost savings mean we have made solid margin progress in First Student for the year, and we are also encouraged by the results achieved at this stage in the 2015 bid season. In UK Bus we continue to deliver passenger volume growth, positive yield and further cost efficiencies from our locally focused turnaround actions.

“Greyhound has flexed mileage, timetables and pricing in response to the rapid reduction in passenger demand from lower fuel prices, and is on track with the yield management upgrade programme. Our First Transit and UK Rail businesses maintained good growth momentum and margins.

“We intend to deliver further progress from our multi-year transformation plans in our 2015/16 financial year. We currently anticipate strong progression in our non-rail businesses, driven mainly by the ongoing turnarounds of First Student and UK Bus, to largely offset the substantially lower contribution from UK Rail as a result of the end of the First ScotRail and First Capital Connect franchises.

“We were awarded a contract to operate First Great Western for up to four and a half more years, and will continue to work closely with the Department for Transport and Network Rail to deliver the £7.5bn Great Western Mainline modernisation programme to at least March 2019. We have also signed an agreement to run First TransPennine Express through to April 1, 2016, and recently submitted our bid to operate the franchise beyond that date.

“Wolfhart Hauser joined the Board of FirstGroup in May and will become Chairman following our AGM in July. Wolfhart’s track record of sustained value creation and his experience and counsel will be invaluable as we continue to drive forward the transformation of the Group.

“Our improved financial performance this year demonstrates that our multi-year transformation programme is making progress, though we must maintain the momentum of change to meet our medium term financial targets. Accordingly we will continue to work hard to deliver the considerable potential of the Group and return to a consistent profile of cash generation and sustainable value creation.”