FirstGroup’s half year results

FirstGroup reported a 17% decrease in revenue for the six months to 30 September 2015, with a figure of £2,440.9m (H1 2014: £2,941.1m). The company said this principally reflected changes in the First Rail franchise portfolio and fewer operating days in First Student as a result of a later than normal start to the school year. Excluding these effects, Group revenue increased by 0.8% on a constant currency basis. Group adjusted operating profit decreased by 14.7% to £88.4m (H1 2014: £103.6m), whilst Group adjusted operating profit increased by 1.6% on a constant currency basis. It claimed this reflects improved underlying financial performance in First Student, FirstBus and the continuing First Rail operations, partially offset by a reduced contribution from Greyhound.

In the first half of the year, FirstBus reported revenues of £437.5m (H1 2014: £449.2m). It delivered commercial passenger revenue growth of 2.2%, which was partially offset by the ongoing weakness in concessionary earnings, resulting in overall like-for-like passenger revenue growth of 1.3%. It expanded a number of actions to optimise its depot portfolio, reduce administrative overheads and ensure delivery of its medium term targets during the period and expects these actions to result in restructuring costs of approximately £7m for the full year. Adjusted operating profit was £15.4m (H1 2014: £16.9m) and adjusted operating margin was 3.5% (H1 2014: 3.8%), after the restructuring costs of £4m (H1 2014: £1.8m) incurred in the period. Overall the operator has delivered cost efficiencies of approximately £10m during the first half. It continues to explore opportunities to work in closer partnership with local authorities throughout its markets, building on the success it has had to date in increasing both passenger volumes and satisfaction.

Chief Executive, Tim O’Toole, said, ‘Overall trading for the Group during the first half was in line with our expectations, with outperformance in some areas offsetting the more challenging market environment in others. The continued progress of our transformation plans are not fully reflected in these first half results because of previously indicated rail portfolio changes and the timing of the school calendar on First Student this year. We have been able to expand our cost efficiency actions in First Bus and are maintaining our margin progress despite the mixed market conditions seen across the industry, particularly for concessionary revenues. Our expectations for the Group’s overall trading performance for the full year are slightly increased as a result of the change in the basis of estimate for rail pensions. Our multi-year transformation plans are now driving the improvements in our underlying performance that are central to sustainable value creation and cash generation over the medium term.’

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