REG-FirstGroup Plc: Post close trading update

FirstgroupAnnouncement

11/10/2023 07:15

FIRSTGROUP PLC

post close Trading update

 

FirstGroup plc ('FirstGroup' or the 'Group') today provides a post close
update on trading for the 27 weeks to 30 September 2023.

 

First Rail

Demand for the division’s open access operations (Lumo and Hull Trains) has
been stronger than anticipated due to increased leisure travel during the
summer period. In addition, the final variable fee payments due for the
division’s management fee-based contracts for the FY 2023 fiscal year have
now been agreed with the Department for Transport (‘DfT’) at a rate ahead
of the amounts accrued in the Group’s FY 2023 financial statements. As a
result of these factors, the division’s FY 2024 adjusted operating profit is
expected to be £12-15m ahead of expectations.

 

First Bus

Despite ongoing inflationary pressures, the division has traded slightly ahead
of expectations during the first six months of FY 2024, due to strong
passenger volumes and productivity improvements resulting from the management
actions we have taken to transform the business.

 

In September 2023, First Bus concluded a period of consultation with regards
to its two Local Government Pension Funds and will subsequently terminate its
participation in these funds on 31 October 2023, with affected employees
enrolled into the First Bus Retirement Savings Plan. As a result of the
termination, the Group anticipates a c.£2-3m annualised cost saving for the
First Bus division, with an estimated saving of c.£1m in FY 2024. The
settlement of the pension obligations, to be determined on the termination
date, is expected to result in an estimated Group net cash inflow of up to
£15m after costs.

 

Corporate

Since June 2023, the Group has bought in the Greyhound Canada pension scheme
at a cost in line with IAS19 and has bought out and settled c.$75m (£c.62m)
of the Greyhound USA pension liabilities at no cost. The balance of the
Greyhound USA pension plan remains well hedged, and the Group continues to
make progress towards exiting the remaining liability.

 

During the period, the Group has opportunistically purchased £12.2m of its
2024 6.875% bonds. As a result, £172.1m of the 2024 bonds remain outstanding.

 

FY 2024 Guidance

Due to the factors referenced above, the Group anticipates that its FY 2024
Group adjusted operating profit and Group adjusted attributable profit will be
ahead of the Board’s previous expectations by c.£14-20m and c.£7-10m
respectively.

 

The cash return from the First Bus pension scheme is anticipated in the second
half of FY 2024. As a result, the Group expects to end the financial year in
an adjusted net cash position of £20-30m, assuming the completion of the
current £115m share buyback programme and before deployment of potential
growth capital.

 

The Group will report its interim results for the 27 weeks to 30 September
2023 on 23 November 2023.

 
Graham Sutherland, FirstGroup Chief Executive Officer, said:
“Over the last few months, we have successfully built on the strong
financial performance we reported at our full year results in June. Our
updated outlook for FY 2024 reflects a strong performance in our First Rail
division, which is testament to the hard work and capabilities of our teams.
In First Bus, we are delivering sustainable revenue growth as passenger
volumes increase and we continue to benefit from the actions we have taken to
transform the business.”

 

 Contacts at FirstGroup:                                                                                                                                  Contacts at Brunswick Group:                                                       
 Marianna Bowes, Head of Investor Relations Stuart Butchers, Head of Corporate Communications corporate.comms@firstgroup.co.uk Tel: +44 (0) 20 7725 3354  Andrew Porter / Simone Selzer Tel: +44 (0) 20 7404 5959                            
                                                                                                                                                                                                                                             
 Contacts at Liberum Capital Limited: Nicholas How / John Fishley Tel: +44 (0) 20 3100 2000                                                               Contacts at RBC Europe Limited: James Agnew / Jack Wood Tel: +44 (0) 20 7653 4000  
                                                                                                                                                                                                                                             

  

Notes to Editors

Following the termination of First Bus’s participation in the pension funds
referenced above, the Group will report a one-off settlement adjusting item of
c.£150m (estimated as at 31 July 2023, subject to confirmation following
termination) in its FY 2024 consolidated income statement, offset by a
reduction in the asset ceiling in its consolidated statement of comprehensive
income. This is expected to result in an estimated cash inflow of up to £15m
after costs, and an estimated reduction of c.£735m in the value of the
pension scheme liabilities on the Group’s balance sheet.

  

FirstGroup plc compiled analyst consensus estimates for FY 2024

A consensus of publicly available sell-side analyst forecasts compiled by the
Group is available on the Group’s website at
www.firstgroupplc.com/investors/analyst-consensus.aspx.

 

Definitions
Adjusted operating profit is defined as operating profit from continuing
operations excluding items which management has determined as not being
relevant to an understanding of the Group’s underlying business performance.

Group attributable adjusted profit is defined as First Bus and First Rail
adjusted operating profit from open access and additional services, plus First
Rail attributable net income from management fee-based operations, minus
central costs, minus cash interest, minus proforma tax.

 

Adjusted net cash/(debt) excludes ring-fenced cash and IFRS 16 lease
liabilities from net cash/(debt).

  

Forward-looking statements

Certain statements included or incorporated by reference within this
announcement may constitute 'forward-looking statements' with respect to the
business, strategy and plans of the Group and our current goals, assumptions
and expectations relating to our future financial condition, performance and
results. By their nature, forward-looking statements involve known and unknown
risks, assumptions, uncertainties and other factors that cause actual results,
performance or achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. No statement in this announcement should be
construed as a profit forecast for any period. Shareholders are cautioned not
to place undue reliance on the forward-looking statements. Except as required
by the UK Listing Rules and applicable law, the Group does not undertake any
obligation to update or change any forward-looking statements to reflect
events occurring after the date of this announcement.

 

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

 
About FirstGroup
FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public
transport services. With £4.8 billion in revenue and around 30,000 employees,
we transported more than 1.8m passengers a day in 2022/23. We create solutions
that reduce complexity, making travel smoother and life easier. Our businesses
are at the heart of our communities and the essential services we provide are
critical to delivering wider economic, social and environmental goals. Each of
our divisions is a leader in its field: First Bus is the second largest
regional bus operator in the UK, serving two-thirds of the country’s 15
largest conurbations with a fleet of more than 4,500 buses, and carrying more
than a million passengers a day. First Rail is the UK’s largest rail
operator, with many years of experience running long-distance, commuter,
regional and sleeper rail services. We operate a fleet of more than 3,500
locomotives and rail carriages through three management fee-based train
operating companies (Avanti West Coast, GWR, SWR) and two open access routes
(Hull Trains and Lumo). We are formally committed to operating a zero-emission
First Bus fleet by 2035, and First Rail will help support the UK
Government’s goal to remove all diesel-only trains from service by 2040. In
February 2023 FirstGroup was named as one of the world’s cleanest 200 public
companies for the fourth consecutive year by sustainable business media group
Corporate Knights in partnership with US not-for-profit organisation, As You
Sow. We provide easy and convenient mobility, improving quality of life by
connecting people and communities. Visit our website at www.firstgroupplc.com
and follow us @firstgroupplc on X.

 

 
 
 

 



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