Extension of GWR Emergency Measures Agreement

FirstGroup plc (‘the Group’)
Statement re extension of Great Western Railway Emergency Measures Agreement

We are pleased to announce that the Department for Transport (‘DfT’) has today exercised its option to extend the Emergency Measures Agreement (‘EMA’) for Great Western Railway (‘GWR’) until at least 26 June 2021.

On 30 March 2020 we announced that we had signed an agreement with the DfT to continue operating GWR until March 2023, with a possible one-year extension.

At that time, we also announced that the franchise would run under EMA terms for at least the first six months in response to the coronavirus outbreak. That time period is now expiring and therefore the DfT has exercised its option for the EMA to continue under the same terms and conditions as previously. Under the EMA, the DfT waive our revenue, cost and contingent capital risk and GWR are paid a fixed management fee with the potential for a small performance-based fee.

Before the end of the EMA period in June 2021, the DfT has an option to further extend the EMA. GWR also has the right to revert to operating with revenue risk but with protection provided though the Forecast Revenue Mechanism until at least 2023. The franchise agreement also makes provision to agree a revenue rebasing which would apply at the end of the EMA term.

The parent company support and performance bond commitments associated with GWR are each £10m, and cash ring-fenced within the train operating company was £266m as at 31 March 2020, out of a First Rail total of £612m.

GWR’s existing EMA was signed on the same day as the new franchise agreement in March, and the DfT’s option to review the EMA formed part of that contract. This process and timing is different from our other three rail franchises which were already on established franchise agreements before adopting EMAs in response to the pandemic. Discussions are underway with the DfT about these franchises which are under EMAs until 20 September 2020. Further updates will be provided to the market as appropriate.

Commenting, Matthew Gregory, Chief Executive said:

“We welcome the news of the extension of the EMA for GWR. This demonstrates the essential nature of GWR’s services to the communities it serves, and provides important clarity and continuity for our customers, employees and wider stakeholders. Across the network we are increasing service levels to provide more capacity as schools recommence and work and leisure facilities reopen, and we are taking all necessary steps to ensure our passengers continue to travel safely. This includes running services with more carriages to allow for distancing, enhanced cleaning and sanitisation of our trains and ensuring more customer-facing employees are readily available. We look forward to delivering further plans that will bring improvements for passengers over the next few months and into the future.”

Group Liquidity

As at the end of August 2020 FirstGroup had c.£850m in free cash (before rail ring-fenced cash) and committed undrawn revolving banking facilities, stable with the liquidity level at the end of June. We intend to update the market on trading conditions in advance of our Annual General Meeting on 15 September.

Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR 6 Annex 1R: 3.1.

About GWR

Great Western Railway provides high speed, commuter, regional and branch line train services and help more than 100 million passengers reach their destinations every year - across South Wales, the West Country, the Cotswolds, and large parts of Southern England. The network is currently seeing the biggest investment since Brunel so we can offer more trains, more seats, and shorter, more frequent journeys and continue the network’s heritage of helping connect more businesses to new markets. Through a series of initiatives, we aim to be a good neighbour to the communities we serve and are committed to making a positive social impact in those regions.

Since 2015, GWR has delivered new fleets of modern intercity and local trains and successfully introduced the largest timetable change in decades in December 2019. Building on these improvements, GWR recently took delivery of the UK’s first tri-mode train able to run on overhead and third-rail electric lines, as well as under its own diesel power, which will enter service next year. The franchise is also due to introduce new more flexible tickets for customers who do not commute every day, such as discounted part-time season tickets and the extension of paperless pay-as-you-go schemes.

About FirstGroup

FirstGroup plc (LSE: FGP.L) is a leading provider of transport services in the UK and North America. With £7.8 billion in revenue in 2020 and around 100,000 employees, we transported 2.1 billion passengers. Whether for business, education, health, social or recreation – we get our customers where they want to be, when they want to be there. We create solutions that reduce complexity, making travel smoother and life easier.

We provide easy and convenient mobility, improving quality of life by connecting people and communities.

Each of our five divisions is a leader in its field: In North America, First Student is the largest provider of home-to-school student transportation with a fleet of 43,000 yellow school buses, First Transit is one of the largest providers of outsourced transit management and contracting services, while Greyhound is the only nationwide operator of scheduled intercity coaches. In the UK, First Bus is one of Britain's largest bus companies with 1.4 million passengers a day in 2020, and First Rail is one of the country's most experienced rail operators, carrying 340 million passengers in the year. Visit our website at www.firstgroupplc.com and follow us @firstgroupplc on Twitter.

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