AGM Statement and Q1 Interim Management Statement
Wednesday 17 July 2013
FIRSTGROUP PLC
AGM STATEMENT AND INTERIM MANAGEMENT STATEMENT
FirstGroup ("the Group") will provide the following update on trading during
the first quarter period ("the period") from 1 April to 30 June 2013 at the
Group's Annual General Meeting in Aberdeen today.
Summary
* Overall trading in line with management's expectations
* Completion of £615m rights issue, providing a strong base to continue our
transformation plans and invest to create sustainable long term value
* Recovery programmes in First Student and UK Bus on track
* Solid performance in First Transit
* Recent trends in core Greyhound continue with effects of a weak US economy
being mitigated through ongoing cost management. Further profitable
expansion of Greyhound Express
* Continued solid revenue growth in UK Rail and shortlisted for Caledonian
Sleeper and Luas competitions
* Completed sale of London bus operations
First Student
Our recovery plan is on track and as we implement a more efficient operating
model and uniform practices across the division we expect margins for the first
half of the year to be ahead of the equivalent period last year. We are on
track to achieve a retention rate of approximately 90%, with a focus on winning
or retaining only those contracts that meet our returns criteria. We are
increasingly well positioned to leverage our scale as the market leader and
deliver sustainable returns and good cash flows.
First Transit
First Transit delivered a solid performance in the period. We are achieving
good growth, using our knowledge, wide-ranging expertise and scale to pursue
opportunities in our core markets. During the period we added to our market
leading shuttle bus portfolio with further contract wins for university
campuses at Chapman, Auburn and the University of Alabama at Birmingham. First
Transit has won new business throughout the last year totalling more than $130m
worth of revenue, including ten conversion contracts.
Greyhound
Our core Greyhound operations continue to be impacted by softness in the US
economy however, as a result of the continuation of cost actions we have taken
to mitigate these effects, we anticipate full year profitability to remain in
line with our business plan.
During the period like-for-like revenue reduced by 6.1% compared to the same
period last year. However, Greyhound Express achieved good like-for-like revenue
growth of 7.9%, and continues to deliver a strong performance particularly where
services become established following the initial start-up phase. We are harnessing
the experience from Greyhound Express and BoltBus to support our plans to modernise
and improve the yield management capability of the core business.
UK Bus
During the period, like-for-like passenger revenue increased by 1.4%. We are
seeing positive results from our transformation programme, particularly from
those operations that are furthest along the process. As we continue to work
through detailed local plans, we are pleased to see strong volume growth as a
result of fares and network changes we initiated in areas such as Sheffield,
Rotherham, Doncaster and Manchester. For the depots which have completed the
first stage of the process, lost mileage and vehicle breakdowns have reduced by
around a third. On 23 June we completed the previously announced sale of eight
of our London bus depots for a combined consideration of approximately £80m.
UK Rail
Our UK Rail division delivered further solid performance during the period with
like-for-like passenger revenue increased by 5.5%. We were pleased to be
shortlisted for the Scottish Government's Caledonian Sleeper services and the
Railway Procurement Agency's Luas light rail network in Dublin. We remain in
discussion with the Department for Transport in respect of the proposed
extensions to our First Great Western and First Capital Connect franchises.
Capital structure
During the period we completed the previously announced £615m rights issue to
remove the constraints of our balance sheet and provide a strong base to
continue our transformation plans and invest to create sustainable, long term
value. We have a detailed programme to invest approximately £1.6bn across our
five divisions over the next four years, to support growth and a return to
target ROCE levels. As previously indicated, as a consequence of this period of
increased investment, we expect that our cash flows will be broadly flat in the
current year. Our expectation is that, through the actions we are taking, the
business will be equipped to deliver improved growth and return to a profile of
consistent returns and cash generation in the medium term.
Outlook
Commenting, Tim O'Toole, Chief Executive said:
"Trading during the period was in line with our expectations. While we continue
to see challenging conditions in some of our markets, there is considerable
long term opportunity across the Group and particularly from our recovery
programmes in First Student and UK Bus. While there remains significant work to
do, our confidence increases as we see the results of our actions taken to
date.
"The task of returning the Group to the position of strength that our
customers, employees, and shareholders expect will require hard work and
persistent delivery for some time to come, and we are pleased by the support of
our shareholders in the recent rights issue. This not only strengthens the
Group with an appropriate capital structure, but also provides a strong base
for the continued investment in our transformation programmes to create
sustainable long term value. "
Contacts FirstGroup:
Chris Surch, Group Finance Director
Rachael Borthwick, Group Corporate Communications Director, Tel: +44 7771 945432/ +44 20 7291 0512
Stuart Butchers, Group Corporate Communications Manager, Tel: +44 7713 317979
Brunswick PR:
Michael Harrison/Andrew Porter Tel: +44 20 7396 7406