‘Material uncertainty’ at First as coronavirus bites
First Group has reported a statutory operating loss of £152.7m in the year to 31 March 2020 (2019: profit of £9.8m).
The company noted that the impact of coronavirus in March resulted in average passenger volumes declining by around 90% by the end of the month. In its financial report, it said it had made cost actions to offset the impact of this, with fiscal and contractual support aiding. However, it resulted in a significant effect on revenue and a material impact to adjusted operating profit, which reduced to £256.8m (2019: £314.8m).
The financial report mentioned ‘material uncertainty’ relating to the levels of financial and contractual support it may receive. There is also uncertainty regarding the levels of passenger volume returning post-pandemic to sustain the business without any further support.
In its First Bus division, like-for-like passenger revenue was up 0.7%, which it says reflects the poor weather in the first half of the financial year and the coronavirus outbreak. Fuel and other inflationary pressures during the year were partially offset by initial benefits of a cost efficiency programme.
The Group says that due to uncertainties surrounding the effects of coronavirus, such as how soon travel demand will return and the rate at which fiscal support tapers, it is currently not possible to provide guidance for the financial year to 31 March 2021.
Chief Executive, Matthew Gregory, said: “The funding and support we have received from governments and our customers to sustain critical transport services is testament to their importance now and for the future. We took rapid action to protect our ability to deliver continuity of the transport services that are so essential to our economies. Our priority since the start of the outbreak has been the health and safety of the Group’s passengers and employees. I am immensely proud of our people who are working so hard to support our communities during the crisis, by maintaining essential transport services and providing direct assistance to those who need it most.
“There is no way of predicting with any certainty how the coronavirus pandemic will continue to affect the public transportation sector and the impact it may have on customer trends longer-term. However, as leading operators in each of our markets we are strongly positioned for a recovery in passenger demand and for the opportunities that may emerge from this exceptional period. This will become ever more pertinent as the focus and drive towards zero-carbon public transportation systems inevitably increases, helping to create a better connected and more sustainable world.
“Despite the near-term uncertainty, the long-term fundamentals of our businesses remain sound. We are resolutely committed to delivering our strategy to unlock material value for all shareholders through the sale of our North American divisions at the earliest appropriate opportunity. The importance of public transport to society has never been more clearly demonstrated, and we will continue to take all necessary measures to enable the Group to emerge from this unprecedented situation in a robust position.”