First’s annual results in line with expectations
Overall trading for FirstGroup in the year ending 31 March 2015 was reported to be in line with management expectations. It achieved revenue of £6,050.7m (2014: £6,717.4m), down 9.9%. However, its EBITDA rose 7.7% to £624.4m (2014: £579.8m) and its adjusted operating profit was £303.6m (2014: £268m), a 13.3% increase.
First’s UK Bus division achieved revenue of £896.1m during the period (2014: £930.2m) with like-for-like passenger revenue increasing by 2.3% excluding the contribution from discontinued and disposed businesses in the prior year. Its operating profit was £51.8m (2014: £44.4m) and its operating margin was 5.8% (2014: 4.8%). These increases were said to reflect operating leverage to growth and its ongoing cost efficiency programmes. With an initial programme of network changes largely completed in the year, the operator said its focus is now on the commercial opportunities that its local management teams can deliver.
First expects its transformation plan to deliver further volume growth in its bus business in 2015/16. Revenue growth is also expected to benefit from positive yield from periodic price increases in line with the market. Operating leverage from this growth, coupled with its cost efficiency programmes, are expected to ensure that it will make further progress during 2015/16 towards its medium term target of double digit margins.
Chief Executive, Tim O’Toole, said, ‘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. 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. 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.’