REG-FirstGroup PLC: Statement on TransPennine Contract

FirstgroupAnnouncement

11/05/2023 07:45

FIRSTGROUP PLC

STATEMENT ON TRANSPENNINE EXPRESS CONTRACT

FirstGroup plc (‘the Group’) today announces that it has been notified by
the Department for Transport (‘DfT’) that it will not exercise its option
to extend the current arrangements for the TransPennine Express (‘TPE’)
National Rail Contract.

The DfT will appoint its Operator of Last Resort to take over delivery of
passenger services on the TPE network from 28 May 2023 when the existing
agreement expires. The DfT’s decision regarding the TPE National Rail
Contract extension relates only to TPE and the Group’s other rail businesses
are not affected.

For a sustained period during the first year of the current contract, TPE
posted its best performance results for a decade. However, in 2022 TPE’s
service levels declined due to circumstances not wholly within the
operator’s control, mainly the challenging industrial relations environment
including the withdrawal of longstanding industry-standard overtime
arrangements while undertaking unprecedented driver training requirements due
to infrastructure upgrades. Following the introduction of an agreed recovery
plan in February 2023, cancellations have fallen by approximately 40% and will
continue to do so as more drivers become available over the next few months.

The Group is disappointed by the decision not to extend the National Rail
Contract for TPE, given the investment and improvements we have made to the
service over the years, which resulted in growing annual passenger numbers
from 14m in 2004 to more than 29m before the pandemic.

Commenting, Graham Sutherland, FirstGroup Chief Executive Officer said:

“We have operated TransPennine Express and its forerunners since 2004, and
are very proud to have served the communities across northern England and into
Scotland, carrying millions of passengers and introducing new trains, new
routes and more seats for our customers. Our team have worked extremely hard
to improve services, including by recruiting and training more drivers than
ever before. We have also worked closely with the DfT and Transport for the
North on an agreed recovery plan as well as an improved offer on overtime
working for our drivers.

“FirstGroup is a leading UK rail operator with a strong and diversified
portfolio. Today’s decision does not alter our belief in the important role
of private rail operators in the delivery of vital, environmentally-friendly
transport for customers and communities across the UK.”

Notes to Editors

In FY 2022, TPE contributed £415.8m of revenue to the Group’s total of
£4,591.1m; £13.2m of adjusted operating profit and £8.9m of attributable
net income, which is the Group’s share of the relevant net post-tax fee
income available for intra-company distribution.

The management fees and performance fees for the period April 2022 to May 2023
will be settled following the finalisation of the completion accounts after
handing the franchise to the Operator of Last Resort. It is not anticipated
that the Group will incur material costs transferring the operation to the
Operator of Last Resort.

About TransPennine Express

TransPennine Express is an intercity rail provider with a vision to Take the
North Further. During the current contract period, TPE has continued to roll
out its new Nova fleets of trains across the network, financed by £500m of
private sector investment and offering greater capacity and flexibility, in
addition to investment in stations and further actions taken to improve
accessibility. TPE has also been a key partner in the significant rail
infrastructure boost for the region due to be delivered by the Transpennine
Route Upgrade and has delivered savings to the taxpayer of around £120m to
date through its involvement in project workstreams on access and rolling
stock. The TPE network includes:
* North TransPennine – including Newcastle to Liverpool Lime Street,
Redcar/Middlesbrough to Manchester Airport, Scarborough to York, Edinburgh to
Newcastle and Hull to Liverpool Lime Street
* South TransPennine – including Cleethorpes to Liverpool Lime Street via
Doncaster, Sheffield to Liverpool Lime Street, and Manchester Airport to
Sheffield
* Anglo-Scottish – including Liverpool to Glasgow, and Manchester Airport to
Edinburgh
About FirstGroup

FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public
transport services. With £4.6 billion in revenue and more than 30,000
employees, our UK divisions transported nearly 1.5m passengers a day in the
last financial year. First Bus is the second largest regional bus operator in
the UK, serving two-thirds of the UK’s 15 largest conurbations with a fleet
of c.4,900 buses. 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 c.3,800 rail vehicles through four management
fee-based train operating companies (Avanti West Coast, GWR, SWR, TPE) and two
open access routes (Hull Trains and Lumo). 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. We no longer
purchase new diesel buses and 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.

Visit our website at www.firstgroupplc.com and follow us @firstgroupplc on
Twitter.

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

Contacts at
FirstGroup:                                                                           
Contacts at Brunswick Group:

Marianna Bowes, Head of Investor
Relations                                        
Andrew Porter / Simone Selzer

Stuart Butchers, Head of Corporate
Communications                          Tel: +44 (0)
20 7404 5959

corporate.comms@firstgroup.co.uk

Tel: +44 (0) 20 7725
3354                                                                                                                          

Contacts at Liberum Capital
Limited:                                                  
Contacts at RBC Europe Limited:

Nicholas How / John Fishley / William
Hall                                             
James Agnew / Jonathan Hardy / Jack Wood

Tel: +44 (0) 20 3100
2000                                                                         
Tel: +44 (0) 20 7653 4000



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