REG-FirstGroup PLC: Trading Statement

FirstgroupAnnouncement

19/02/2019 07:05

FIRSTGROUP PLC

WINTER TRADING UPDATE

FirstGroup plc, a leading provider of transport services in the UK and North
America, today reports
overall revenue growth and trading in line with our expectations since the end
of September 2018.

Summary
*
Reported Group revenue growth +13.7% year to date (YTD); Group revenue in
constant currency(1) and excluding the SWR rail franchise +5.5% YTD; Road
divisions' revenue in constant currency(1) +1.9% YTD
*
Overall trading in the period supports our unchanged outlook for the full
year, with higher cash inflows
*
As planned, January 2019 bond refinanced from cash and bank facilities; next
bond due April 2021

 Increase/(decrease) vs comparable period, in constant currency (1)      Sept 2018      YTD 
                                                                         - Jan 2019         
 First Student revenue                                                        +6.2%   +5.8% 
 First Transit revenue                                                        +2.3%   +0.9% 
 Greyhound like-for-like revenue                                              +0.2%  (0.4)% 
 First Bus like-for-like passenger revenue                                    +1.3%   +1.4% 
 First Rail like-for-like passenger revenue                                   +4.2%   +5.0% 

Commenting on today’s announcement, FirstGroup Chief Executive Matthew
Gregory said:

"Our overall trading performance in the period was in line with our
expectations; in particular last summer’s strong bid season in First
Student, our largest division, together with further momentum in First Bus,
support our unchanged outlook for the full year. Recognising that overall
conditions in our markets remain uncertain, and poor weather retains the
potential to affect our performance, we are getting on with delivering plans
that will improve services for customers and unlock the inherent value within
the Group."

Divisional updates

In First Student, we are benefiting from the price increases and higher
contract retention rates we achieved in last summer’s bid season.
Notwithstanding ongoing driver shortages from the strong US employment market,
our solid performance since the start of the school year, together with cost
efficiency actions, underpin our confidence in delivering profit growth for
the full year.

First Transit’s performance remains broadly in line with the prior year,
with contract awards and organic growth offsetting the end of a number of
relatively large contracts, including the previously noted high margin
business in the Canadian oil sands region. Our productivity and cost
efficiency improvements continue to offset the persistently challenging cost
environment for drivers in the US.

Greyhound continues to face a difficult trading environment in certain of its
markets. We have been implementing the actions of the plan we set out in
November, following our review of Greyhound’s business and prospects, and
are beginning to see early signs of improvement from the commercial and
operational changes we have made across the network. In Canada, our withdrawal
of service in significant parts of the country from October 2018 has proceeded
to plan, and we continue to take action to unlock value, such as the sale of a
facility in Chicago for $38m at the end of January 2019.

First Bus like-for-like passenger revenue growth was +1.3% in the period with
higher revenue per mile from our commercial actions. This more than offset a
like-for-like passenger volume decrease of (1.9)% in the period, driven by
subdued high street footfall over the Christmas period and network
restructuring. Our industry-leading rollout of contactless ticketing and other
actions are enhancing convenience for our customers and supporting greater
efficiency. We continue to improve our margins by modernising our operating
procedures and work practices, whilst taking the necessary actions to ensure
our cost base is appropriate. We continue to prioritise investment in those
markets where stakeholders support our ambitions to deliver thriving and
sustainable bus services. In the period for example we announced 75 new
ultra-low emission vehicles for Glasgow in 2019, and have taken delivery of
more than 100 new ultra-low emission buses in Leeds in the last twelve months,
part of our £71 million investment in the partnership with the city. Today we
announced the sale of Queens Road, one of our bus depots in Manchester, to the
Go-Ahead Group for £11.2m.

First Rail's like-for-like passenger revenue growth slowed to +4.2% in the
period, principally reflecting significant infrastructure challenges which
resulted in disappointing operating performance for passengers towards the end
of 2018. We are working constructively with our industry partners to improve
our operating performance and are encouraged with the improvements made since
the start of 2019. GWR continues to roll out the Hitachi Intercity Express
Train fleet and to manage customer journeys around the substantial
infrastructure upgrade work being undertaken by Network Rail. In December TPE
made several amendments to the timetable that have significantly enhanced the
reliability of services. In addition to the reduced services caused by strike
action, the performance of SWR has been affected by several operating
incidents in the period that caused significant disruption. As previously
noted, in accordance with all our current franchise agreements, we are engaged
in discussions with the Department for Transport to work through potential
commercial and contractual amendments, a process that remains ongoing.

January 2019 bond

The £250 million 6.125% coupon bond due January 2019 was recently refinanced
from cash on hand and revolving bank facilities as planned. As previously
indicated this will not have a significant effect on the Group’s overall
interest costs going forward as the bond had been swapped to a floating rate.
The Group’s next major refinancing is the £350 million 8.75% bond due April
2021.

Investor information

A conference call for investors and analysts will be held at 9:00am today.
Please call +44 (0) 20 7725 3354 in advance of the call to register and
receive joining details. A playback facility will be available together with a
pdf copy of this announcement at www.firstgroupplc.com/investors.

The Group is scheduled to announce results for the year to 31 March 2019 on
Thursday 30 May 2019.

Contacts at FirstGroup:

Faisal Tabbah, Head of Investor Relations

Stuart Butchers, Group Head of Media

Tel: +44 (0) 20 7725 3354

Contacts at Brunswick PR:

Andrew Porter / Alison Lea, Tel: +44 (0) 20 7404 5959

Notes

(1)     Changes 'in constant currency' throughout this announcement are
based on retranslating prior period foreign currency amounts at current period
rates.

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

Unless otherwise stated, all financial figures for the 'period' include the
results of the First Rail business for the 16 weeks to 5 January 2019 and the
results of all the other businesses for the four months to 26 January 2019,
with increases or decreases compared to the comparable period in the prior
year. All 'year to date' or 'YTD' financial figures include the results of the
First Rail business for the 40 weeks to 5 January 2019 and the results of all
the other businesses for the ten months to 26 January 2019, with increases or
decreases compared to the comparable period in the prior year. References to
‘like-for-like’ revenue adjust for changes in the composition of the
divisional portfolio (Rail therefore excludes SWR franchise), holiday timing,
severe weather and other factors, for example engineering possessions in First
Rail, that distort the period-on-period trends in our passenger revenue
businesses. Full year results for 2019 will include the results and financial
position of First Rail for the year to 31 March 2019 and the results and
financial position of all the other businesses for the 52 weeks ended 30 March
2019.

Figures presented in this announcement are not audited. 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. 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.

About FirstGroup

FirstGroup plc (LSE: FGP.L) is a leading provider of transport services in the
UK and North America. With £6.4 billion in revenue and around 100,000
employees, we transported 2.1 billion passengers last year. Whether for
business, education, health, social or recreation – we get our customers
where they want to be, when they want to be there. We create solutions that
reduce complexity, making travel smoother and life easier.

We provide easy and convenient mobility, improving quality of life by
connecting people and communities.

Each of our five divisions is a leader in its field: In North America, First
Student is the largest provider of home-to-school student transportation with
a fleet of 42,500 yellow school buses, First Transit is one of the largest
providers of outsourced transit management and contracting services, while
Greyhound is the only nationwide operator of scheduled intercity coaches. In
the UK, First Bus is one of Britain's largest bus companies with 1.6 million
passengers a day, and First Rail is one of the country's largest and most
experienced rail operators, carrying more than 260 million passengers last
year.

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



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