Friday, 17 November 2017

FirstGroup Half-yearly results for the six months to 30 September 2017



Commenting on the results, Chief Executive Tim O'Toole said: "The overall trading performance and significantly increased free cash generation of the Group in the first half was consistent with the plans we outlined at the start of the financial year. 
Solid performances from most of our businesses are partially obscured by the impact of the recent severe hurricane on our operations in Puerto Rico. 


In the second half we will benefit from our normal seasonal bias, our ongoing focus on cost efficiencies and from additional business which commenced in the period, including the South Western Railway franchise. We expect to make further progress and deliver substantial free cash generation for the year as a whole."





Operating and financial review Group revenue in the first half increased by 8.1% reflecting the impact of First Rail’s new SWR franchise and translation of US dollar-based businesses into sterling at more favourable rates than the prior period. Group revenue increased by 0.9% in constant currency and after adjusting for the new SWR franchise, with revenue growth on this basis in all divisions except First Student, where pricing strategy continues to result in a smaller but higher returning portfolio of contracts. 


Group adjusted operating profit in the first half increased modestly to £89.4m (H1 2016: £89.0m), with growth, ongoing cost efficiencies and favourable currency translation offset by the impact of the recent severe hurricanes, particularly for First Transit in Puerto Rico, fewer First Student operating days in the first half as expected and the initial impact of the SWR franchise, which commenced during the Waterloo platform upgrade in late August.
Adjusted profit attributable to ordinary shareholders was £22.4m (H1 2016: £16.3m) with higher adjusted profit before tax and a loss attributable to non-controlling interest due to the start of the SWR franchise partly offset by a higher effective tax rate of 30.0% (H1 2016: 25.1%).


Tim O'Toole further commented
"Our overall trading performance and free cash generation in the first half was consistent with the plans we outlined at the start of the financial year, with solid performances from most of our businesses partially obscured by the impact of the recent severe hurricanes, particularly on our operations in Puerto Rico. First Bus delivered encouraging like-for-like passenger revenue growth overall in the period, though industry conditions remain uncertain. Margin in the period mainly benefitted from our systematic programme of management actions to maximise patronage, increase efficiency and reduce cost, including the recent closure of three depots. We anticipate an acceleration of efficiencies and savings in the second half, as we focus our investment only on those local markets where our stakeholders recognise the value to the community of successful bus services, and where our ability to generate sustainable value is strongest.
First Rail revenues increased significantly, reflecting the inclusion of the South Western Railway franchise for the first time as well as passenger revenue growth in our pre-existing businesses. Our plans for each of our franchises are based on improving the experiences of our passengers through fleet upgrades, timetable improvements and performance enhancements, though some of these are reliant on infrastructure upgrades managed by our industry partners, particularly in GWR, which are progressing at a slower pace than originally envisaged.
In the second half we will benefit from our normal seasonal bias, our ongoing focus on cost efficiencies and from additional business which commenced in the period. Notwithstanding some of the challenges faced in the first half, we expect to make further progress over the full year, while our cash performance so far affirms our confidence in generating substantial free cash flow for the year as a whole.


Last Thursday 10th November marked one year since the fatal derailment of a tram we operate on behalf of Transport for London in Croydon, a tragedy which continues to weigh heavily on us. We continue to provide our full support to the ongoing investigations into the incident, as it is absolutely essential that the reasons for the derailment are established.

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