FirstGroup plc : 24/01/2013 - FirstGroup PLC Interim Management Statement

FirstGroup PLC Interim Management Statement

 
TIDMFGP 
 
Embargoed until 7:00am on Thursday 24 January 2013 
 
                                FIRSTGROUP PLC 
 
                         INTERIM MANAGEMENT STATEMENT 
 
FirstGroup plc ("the Group") the leading transport operator in the UK and North 
America, reports the following update on trading from 1 October to 31 December 
2012 ("the period" or "the third quarter"). 
 
Overview 
 
Trading for the Group, excluding the one-off effect of Hurricane Sandy, during 
the third quarter was in line with our expectations. Despite the economic 
conditions that prevail, we continue to strengthen the business for the future 
by taking actions that will lead to improved performance and sustainable 
growth. 
 
We were pleased by continued strong support from fixed income investors in 
November, which led to our issue of GBP325m of 10-year bonds being significantly 
oversubscribed. The proceeds were used to pay down debt, as part of our 
strategy to reduce reliance on bank borrowings and extend our debt maturity 
profile. 
 
First Student 
 
The roll out of management actions across the business continues to underpin 
performance and strengthen the operating model of First Student. Although there 
is significant work still to be done, we remain on track with our plans and the 
business is set on the path to recovery. A significant amount of our operations 
were disrupted by Hurricane Sandy in late October. The storm, which affected 
the entire eastern seaboard, parts of the Midwest and Eastern Canada, impacted 
some 130 of our locations and led to the closure of schools for up to nine 
days. This is expected to adversely impact operating profit by approximately 
$15m in 2012/13. Nevertheless, our current expectations for underlying margin 
performance for the full year remain broadly unchanged. 
 
First Transit 
 
Our transit division generated good operating results from its range of 
operations, the majority of which require low capital investment. A strong 
performance was achieved with good revenue growth particularly within our core 
operations. We continue to see good contract retention rates and develop 
opportunities from a healthy pipeline of new contract bids. We are proactively 
working through a small number of historic legal claims within First Transit. 
As a result, settlement discussions have now been scheduled for February 2013 
in respect of historic meal and rest break claims in the Fixed Route and 
Paratransit businesses which date back to 2003. 
 
Greyhound 
 
During the period like-for-like revenue growth was 1.6%, with Greyhound's US 
operations continuing to achieve a strong performance. Against the backdrop of 
a sluggish economy, operating margin performance remains in line with our 
expectations as a result of the actions we have taken. These actions have 
transformed the business and created a more flexible and agile operating model. 
We continue to expand our popular Express product and build on the unique 
strength of our national network in providing support for sustainable flows on 
newly launched services as we roll out across more destinations. During the 
period we expanded Express service to new states including Louisiana, Oklahoma, 
Nevada and Ontario, Canada. 
 
UK Bus 
 
Like-for-like passenger revenue growth was 2.1% in the period. Notwithstanding 
the challenging economic environment which continues to affect many of the 
urban areas in which we operate, we are making headway with our detailed plan 
to recover performance and equip the business to achieve increased revenue and 
patronage growth. We continue to work through our programme of disposals. In 
November 2012 we agreed the sale of our Birkenhead and Chester operations for GBP 
4.5m and today we are pleased to announce the sale of our Kidderminster and 
Redditch bus businesses to Rotala PLC for a gross consideration of GBP1.5m. While 
there remains considerable work to be done across our UK Bus division, we are 
encouraged by early positive signs in some of our markets. As previously 
stated, we expect UK Bus operating margin to be approximately 8% for the full 
year. 
 
UK Rail 
Our rail division continues to benefit from strong passenger growth across all 
of our franchises and like-for-like revenue increased by 8.1% in the period. We 
welcomed the publication of the independent review by Richard Brown on 10 
January which called for an early return to refranchising so that the private 
sector can continue to provide effective and efficient passenger rail services 
with further performance and infrastructure improvements. As the UK's largest 
and most experienced rail operator, we remain committed to maintaining a 
leading position in the market. We look forward to receiving details on the 
recommencement of the franchise process and submitting further high quality 
bids that deliver for passengers, taxpayers and shareholders. During the period 
the Scottish Government announced that the ScotRail franchise will now end on 
31 March 2015, from its previous end date of 9 November 2014. 
 
Outlook 
 
Commenting, Tim O'Toole, Chief Executive said: 
 
"Trading for the Group, excluding the one-off effect of Hurricane Sandy, during 
the third quarter was in line with our expectations. We have leading positions 
in a sector that is a key enabler of economic growth and the backbone of 
vibrant and sustainable local economies. Demand for high quality, attractive 
services that offer value for money remains and we are confident that the 
actions we are taking will strengthen our business and its prospects for long 
term growth. While there is significant work still to do, we are satisfied with 
the progress of the actions taken so far, though we remain cautious in respect 
of continued economic weakness. 
 
"As previously stated, following the uncertainty caused by the Department for 
Transport's decision to delay its refranchising programme the Board held the 
interim dividend at last year's level. We will consider the full year dividend 
in May 2013, by which time the prospects for our rail division are expected to 
be clearer." 
 
  A conference call for analysts and investors will be held at 9:30am today. 
 
Please call [phone] in advance of the call to register and to receive 
                               joining details. 
 
Contacts FirstGroup plc: 
 
Chris Surch, Group Finance Director 
 
Rachael Borthwick, Group Corporate Communications Director Tel: + 44 20 7291 
0512 / [phone] 
 
Stuart Butchers, Group Corporate Communications Manager Tel: + 44 20 7291 0507 
/ [phone] 
 
Brunswick PR: 
 
Michael Harrison/Andrew Porter 
 
Tel: [phone] 
 
FirstGroup plc is the leading transport operator in the UK and North America. 
With approximately 124,000 employees we carry 2.5 billion passengers every year 
across our bus and rail networks in the UK and our school bus, transit and 
intercity coach operations in the US and Canada. Our vision is to provide 
solutions for an increasingly congested world...keeping people moving and 
communities prospering.