First Group Half-Year Results

Half Year Reults  - Group overview:
 Overall trading for the Group in line with management's expectations, with outperformance in some areas offsetting the more
challenging market environment in others
 Changes to rail franchise portfolio reduced revenue by £586.2m and operating profit by £13.6m compared with the prior period
 Fewer First Student operating days this year due to timing of school calendar reduced revenue by £18.3m and operating profit by
£7.8m in the period, which will reverse next year
 Excluding the above effects, Group revenue increased by 0.8% on a constant currency basis
 As a result of a change in the basis of estimate for First Rail pensions, management’s expectations for the Group's overall trading
performance for the full year are increased by £15m (H1 effect of £7.2m)
 Confident that the transformation plans are driving the improvements in underlying performance that are central to sustainable
cash generation over the medium term
 Matthew Gregory appointed as Chief Financial Officer with effect from 1 December 2015

Commenting, Chief Executive Tim O'Toole said:
"Overall trading for the Group during the first half was in line with our expectations, with outperformance in some areas offsetting the more challenging market environment in others. The continued progress of our transformation plans are not fully reflected in these first half results because of previously indicated rail portfolio changes and the timing of the school calendar on First Student this year.
In First Student we concluded this year's bid season with higher average price increases than in the previous year and a solid contract retention rate. This will improve the margins and returns in our largest business, despite a more challenging environment for driver recruitment and retention in some of our markets. We have been able to expand our cost efficiency actions in First Bus and are maintaining our margin progress despite the mixed market conditions seen across the industry, particularly for concessionary revenues.

Our yield management and real-time pricing systems in Greyhound have now been launched as planned and their benefits will build over time. 

First Transit continues to win additional business, though as anticipated, demand in both Greyhound and First Transit has been affected by the substantial reduction in the oil price. On a comparable basis, our First Rail division is performing towards the top of our range of expectations, underpinned by strong passenger volume growth.
"Our expectations for the Group's overall trading performance for the full year are slightly increased as a result of the change in the basis of estimate for rail pensions. 
We continue to expect underlying net cash flow for the full year to be broadly flat. Our multi-year transformation plans are now driving the improvements in our underlying performance that are central to sustainable value creation
and cash generation over the medium term.
"In December Matthew Gregory joins the Group as Chief Financial Officer, succeeding Chris Surch on his retirement. We look forward to benefiting from Matthew’s financial, strategic and international experience. On behalf of the Board and everyone at FirstGroup, I would like to thank Chris for his commitment and contribution to the Group since he joined in 2012. He has played a key role in placing the business on a stronger footing and leaves with our good wishes for the future."