Friday, 18 November 2016

FirstGroup Half Year Results

FirstGroup have published their half year results summary as follows:-

·       Overall trading as outlined in the results in June continued during the first half

·       Encouraging performances by North American business were partially offset by 
more challenging trading conditions for the UK operations

·       Significantly improved cash performance in the period

                                    Adjusted1                           Statutory

                H1 2016       H1 2015        Change     Change in   H1 2016    H1 2015
                     £m            £m                    constant        £m         £m
                                                        currency2

Revenue         2,564.7       2,440.9         +5.1%        (1.0)%   2,564.7    2,440.9

Operating          89.0          88.4         +0.7%        (1.7)%      77.9       58.5
profit

Operating          3.5%          3.6%       (10)bps          flat      3.0%       2.4%
profit margin

Profit/(loss)      21.9          22.4        (2.2)%                    11.1      (7.5)
before tax

EPS                1.4p          1.2p        +16.7%                    0.7p     (0.4)p

Net debt3       1,491.5       1,588.0        (6.1)%        (9.3)%

Financial performance:

·       Group reported revenue +5.1% with First Student and First Transit growth and 
favourable currency translation, offset by route remapping and end
of subsidy on TPE and lower Greyhound and First Bus demand. Group revenue (1.0) 
% in constant currency

·       Flat adjusted operating profit margin in constant currency, with rebased First Rail 
margin on new contracts holding back Group margin
improvement

·       Favourable currency translation of North American profits was offset by higher 
dollar-based UK fuel costs in H1; however the second half-weighted
profile of First Student earnings will result in positive net impact for the full year if 
recent currency trends continue

·       Adjusted EPS increased by 16.7% with no non-controlling interest in the new 
TPE franchise

·       Seasonal net cash outflow is an improvement of £103.8m compared with prior period, 
primarily driven by working capital performance; net debt: EBITDA
reduced to 2.4x compared with 2.6x in September 2015

Divisional summary:

·       Robust First Student bid season with 7.3% average price increases and solid contract 
retention; margin improved in the period and well positioned for
the full year following a successful school year start up

·       First Transit growth and margin performance affected by lower Canadian oil sands shuttle 
activity and cost headwinds in the period; secured some
important contract wins for future growth
·       Greyhound revenue decreased 3.9% as competing transport modes benefited from cheaper fuel; 
resilient margin performance from cost
control and growing benefits of our business model changes

·       First Bus passenger revenue decreased by 1.3% as a result of ongoing industry-wide demand 
challenges; cost actions partially
mitigated the impact of currency fluctuations on fuel 
·       First Rail passenger growth of 0.7% reflects slowdown seen across the industry and major 
GWR infrastructure upgrade work; trading
margin rebased towards industry norms as previously indicated
 
Looking ahead:

·       Overall trading in the first half has been consistent with the expectation of good progress 
in the current year, recognising likely currency
tailwinds but an uncertain UK macroeconomic backdrop

·       First half cash performance supports the objective to significantly increase free cash generation 
for the 2016/17 financial year

Commenting, Chief Executive Tim O'Toole said:

"Our overall trading performance as outlined at the start of the financial year continued during the first half, 
with encouraging performances by our North
American business partially offset by tough trading conditions for our UK bus and rail operations. 
In the second half we will benefit from our normal
seasonal bias as well as our ongoing focus on executing our strategy. We continue to expect good 
progress for the Group in the current year, recognising
we will likely benefit from currency tailwinds from our substantial North American operations but will 
also face uncertain economic conditions in the UK
for the foreseeable future. Our cash performance in the first half affirms our confidence in generating 
significantly increased cash flow for the full year.

"I am shocked and saddened by the incident on Tramlink last week. On behalf of everyone at FirstGroup 
I would like to express our condolences to the bereaved
families and friends and to those injured in this incident. We are working with Transport for London and the 
authorities to provide assistance in any way
possible to those who have been affected and to the ongoing investigation."
 
APOLOGIES FOR THE PRESENTATION of this posting but we encountered some technical 
difficulties with the house style, when loading it today. Hopefully normal service will be resumed 
tomorrow. 

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