StockMarketWire.com
FirstGroup says overall trading is in line with management's expectations, and its transformation plans continue to make progress.

* First Student: recovery plan on track, with improved pricing achieved in recent bid season and cost efficiencies * First Transit: revenue expectations benefitting from organic growth on existing contracts * Greyhound: demand adversely affected by sharply lower fuel prices over the key holiday period * UK Bus: continued volume growth and progress with cost savings, with increases in yield starting to contribute * UK Rail: robust volume and revenue growth, with financial performance towards the top end of our expectations

Chief executive Tim O'Toole said: "Overall trading for the group is in line with our expectations. Our First Student and UK Bus transformation plans are on track and both divisions are delivering the expected improvements in financial performance.

"Demand for Greyhound services over the important holiday period was adversely affected by the significant and rapid reduction in fuel prices, which makes car travel more affordable and competitive with our services. This was offset by good performances in First Transit and our UK Rail operations, which are both achieving growth towards the top of our expectations with robust margins.

"Overall we are on course to meet our full year expectations for the Group, and we are confident that our multi-year plans will deliver improved cash generation and create sustainable value over the medium term."

StockMarketWire.com
FirstGroup's transPennine rail franchise has been extended for a further year.

The group says this deal means that the First TransPennine Express franchise will operate beyond its current end date of 31 March 2015 to 1 April 2016.

This date is coterminous with the Government's anticipated start for the new TransPennine Express franchise.

The group is shortlisted and looks forward to submitting a bid later in the year to deliver significant improvements for customers and value for money for taxpayers.

FirstGroup says today's award secures continuity of rail services for passengers over the next year and during this period First TransPennine Express will continue to progress areas which passengers have identified as important such as the installation of free Wi-Fi to key stations across the route and an enhanced programme of customer service training.

Chief executive Tim O'Toole said: "We have an excellent track record at First TransPennine Express, which provides vital connections between key cities in the North of England and Scotland. Since the franchise began, our experienced team have worked hard to introduce brand new trains, refurbished stations, increased frequency and improved journey times. As a result the service is more popular than ever, now carrying 26 million passengers a year compared to 13 million in 2004.

"Today's agreement with the Department for Transport provides continuity and consistency for First TransPennine Express passengers over the next year, as we focus on continuing to deliver great customer service and introducing improvements ahead of submitting our bid for the new franchise later in the spring."

StockMarketWire.com
FirstGroup's underlying revenue increased by 4.1% in the year to the end of March but reported revenue decreased due to rail franchise changes and non-recurrence of revenues from UK Bus operations.

Overall trading for the group was in line with management's expectations.

Reported group revenue decreased by 9.9% in the year to £6,050.7m (2014: £6,717.4m), principally reflecting UK Rail franchise changes, non-recurring revenues from UK Bus operations sold or closed in the prior year and foreign exchange translation.

Excluding these items, revenue increased by 4.1%.

Adjusted group margin increased to 5.0% (2014: 4.0%). The US dollar margin of our largest division First Student improved by 1.0%, reflecting the successful outcome of the first year of our new contract bidding strategy and no repeat of the exceptionally severe winter weather conditions in the prior year.

The UK Bus margin also improved by 1.0% as a result of continued progress in our turnaround programme. During the second half of the year Greyhound margins deteriorated due to the adverse effect on customer demand from sharply lower fuel prices, closing the year at 6.9% (2014: 7.4%).

UK Rail profitability improved significantly, reflecting good passenger revenue growth and First Great Western moving to normal commercial terms part way through last year. Group adjusted operating profit increased by 13.3% to £303.6m (2014: £268.0m).

Adjusted profit attributable to ordinary shareholders increased by 48.2% to £117.5m (2014: £79.3m), due to higher adjusted operating profit and lower net finance costs.

Adjusted EPS increased by a lower percentage to 9.8p (2014: 7.5p), due to the increased weighted average number of shares in issue following the rights issue completed in the prior year. Adjusted EBITDA increased 7.7% to £624.4m (2014: £579.8m). Statutory operating profit was £ 245.8m (2014: £232.2m), reflecting the higher adjusted operating profit partly offset by the gain on disposal of London operations in UK Bus last year.

The net debt:EBITDA ratio was 2.25 times (2014: 2.25 times), in part reflecting the UK Rail end of franchise cash outflows in the year and foreign exchange translation. ROCE was 7.8%, or 8.5% (2014: 8.2%) at constant exchange rates.

Chief executive Tim O'Toole said: "Overall trading for the year is in line with our expectations and our transformation plan is beginning to deliver improving financial performance, though clearly much hard work remains ahead of us.

"The pricing improvements we made in the 2014 bid season together with further cost savings mean we have made solid margin progress in First Student for the year, and we are also encouraged by the results achieved at this stage in the 2015 bid season. In UK Bus we continue to deliver passenger volume growth, positive yield and further cost efficiencies from our locally focused turnaround actions. Greyhound has flexed mileage, timetables and pricing in response to the rapid reduction in passenger demand from lower fuel prices, and is on track with the yield management upgrade programme. Our First Transit and UK Rail businesses maintained good growth momentum and margins.

"We intend to deliver further progress from our multi-year transformation plans in our 2015/16 financial year. We currently anticipate strong progression in our non-rail businesses, driven mainly by the ongoing turnarounds of First Student and UK Bus, to largely offset the substantially lower contribution from UK Rail as a result of the end of the First ScotRail and First Capital Connect franchises.

"We were awarded a contract to operate First Great Western for up to four and a half more years, and will continue to work closely with the Department for Transport and Network Rail to deliver the £7.5bn Great Western Mainline modernisation programme to at least March 2019. We have also signed an agreement to run First TransPennine Express through to 1 April 2016, and recently submitted our bid to operate the franchise beyond that date.

"Wolfhart Hauser joined the Board of FirstGroup in May and will become Chairman following our AGM in July. Wolfhart's track record of sustained value creation and his experience and counsel will be invaluable as we continue to drive forward the transformation of the Group.

"Our improved financial performance this year demonstrates that our multi-year transformation programme is making progress, though we must maintain the momentum of change to meet our medium term financial targets. Accordingly we will continue to work hard to deliver the considerable potential of the Group and return to a consistent profile of cash generation and sustainable value creation."

StockMarketWire.com
FirstGroup, a leading transport operator in the UK and North America, has reported that overall trading for the Group during the first half was in line with our expectations in the first half of its financial year to 30 September 2015.

In its different sectors it commented:
** First Student: second year of enhanced contract pricing strategy delivered as planned; cost efficiency plans on track.

** First Transit: further contract awards in rest of business offset by reduced Canadian oil sands activity.

** Greyhound: yield management project on track; flexing cost base to help mitigate reduced demand from cheaper fuel.

** UK Bus: commercial revenue growth and cost efficiencies from transformation partially offset by lower concession revenues.

** UK Rail: strong passenger revenue growth and financial performance.

Chief executive, Tim O'Toole, said: "We continue to progress our transformation plans which will drive sustainable improvements in the financial performance and cash generation of the Group, despite a more challenging trading environment in some of our markets in the period."

StockMarketWire.com
FirstGroup's revenues in the third quarter fell by 9.5% on a constant currency basis, principally reflecting changes to the rail franchise portfolio, and the number of First Student operating days due to the timing of school calendar.

Excluding these previously announced effects, group revenues increased by 0.9% in constant currency in the period.

The group said continued progress of the transformation plans in the third quarter was mitigated by a challenging trading environment:

- First Bus revenues affected by lower than forecast high street retail footfall with exceptionally wet weather and flooding in some markets

- First Student experienced higher costs related to acute driver shortages in certain locations as a result of the tightening US employment market.

Management's outlook for operating profit in the current financial year is slightly lowered by trading in the period

But the group is confident that the transformation plans continue to improve underlying performance and will drive sustainable cash generation over the medium term as planned.

The group was awarded TransPennine Express rail franchise in December, increasing duration of First Rail portfolio to at least 2023

StockMarketWire.com
FirstGroup's underlying revenue was broadly flat at £5,218.1m in the year to the end of March, while reported revenue decreased by 13.8% mainly due to changes in the rail franchise portfolio.

Group adjusted operating profit at £300.7 was, however, comparable to the prior year, benefiting from cost efficiencies in First Student and First Bus and a good performance from First Rail, though the group was disappointed that costs associated with driver shortages in First Student did not allow it to report more progress this year.

Adjusted EPS increased by 5.1% and net cash inflow for the year (before end of rail franchise outflows) was £36.0m, which is expected to increase going forwards.

Statutory operating profit increased by 0.2% to £246.3m and EPS rose by 21.0% to 7.5p.

Chief executive Tim O'Toole said: "Overall we have made encouraging progress this year toward a profile of more consistent financial returns for the Group. As we indicated at the start of the year, a smaller rail franchise portfolio and fewer operating days in our school bus business were factors that would make delivering headline growth this year challenging. However, by being flexible with our plans we have delivered a comparable adjusted operating profit to last year and a net cash inflow ahead of our expectations.

"The Group expects to make strong progress in the year ahead despite a challenging trading environment in several of our markets. This will come from our continued focus on disciplined contract bidding and rigorous cost efficiency programmes, as well as lower fuel costs and more First Student operating days compared with the year just ended. Following several years of reinvestment we expect to deliver a significant increase in net cash generation. Overall, we expect the considerable efforts of our people in recent years to be reflected in a significant improvement in our profile of sustainable returns and cash generation going forward."

JP Morgan Cazenove today reaffirms its overweight investment rating on FirstGroup PLC (LON:FGP) and cut its price target to 141p (from 153p).

Statement re: South Western rail franchise competition
FirstGroup is pleased to announce that MTR Corporation (UK) will join the Group in a joint venture to bid for the South Western rail franchise, following the assent of the Department for Transport.

Commenting, Steve Montgomery, First Rail Managing Director said:
"We are pleased that we will be partnering with MTR in a joint venture to bid for the South Western rail franchise, for which we were shortlisted in February 2016. We have extensive expertise of running commuter, inter-urban, regional and long distance services such as those that make up the South Western franchise and a strong track record in delivering passenger growth. MTR run successful suburban and commuter railways; their knowledge from running London Overground and TfL Rail on behalf of Transport for London will add further depth and understanding to an important component of this franchise.

"Together, FirstGroup and MTR will develop an innovative and value for money proposal that will deliver better connectivity and significant improvements for South Western customers. Our bid will keep people moving and communities prospering across the region."

StockMarketWire.com
FirstGroup's revenues rose by 5.1% to £2,564.7m in the six months to the end of September.

Adjusted operating profits were up 0.7% at £89.0m but adjusted pre-tax profits fell 2.2% to £21.9m.

On a statutory basis, operating profits rose to £77.9m from £58.5m and there was a pre-tax profit of £11.1m compared with a loss of £7.5m last time.

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."

He added: "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. "

RBC Capital Markets today reaffirms its underperform investment rating on FirstGroup PLC (LON:FGP) and raised its price target to 125p (from 90p).

StockMarketWire.com
FirstGroup saw a significant improvement in operating results in the year to the end of March with substantial cash generation delivered as planned.

Group revenue rose by 8.3% to £5,653.3m and adjusted operating profit was up 12.7% at £339.0m, driven by First Student and First Transit and favourable currency translation.

Adjusted pre-tax profits were up 23% at £207.0m.

In constant currency, group revenue was down 0.5% and adjusted operating profits were up 2.3%.

Statutory operating profit increased by 15.1% and statutory EPS increased by 24.0%, with gains on disposal of a Greyhound property largely offset by reorganisation and restructuring costs and pre-tax profits were up 34.4% at £152.6m.

Chief Executive Tim O'Toole said: "We report our results today against the backdrop of the derailment of a tram operated by one of our subsidiaries on behalf of Transport for London in Croydon on 9 November 2016, a tragedy that has shocked and saddened us all.

"We are profoundly sorry that such an incident could take place aboard a service we operate.

"We are focused on understanding the exact cause of this incident and will continue to provide our full support to the ongoing investigations.

"Our thoughts remain with the families and friends grieving for the seven people who lost their lives, and those who were injured and affected by this terrible event.

"We are encouraged by this year's improved financial results, with our largest division First Student delivering a significant margin improvement despite continued driver recruitment challenges, while our First Bus and First Rail operations have faced more challenging market conditions this year.

"Through rigorous focus on sustainable operational and capital efficiencies, we were also able to generate substantially improved net cash inflow of £147m.

"In the year we have maintained our consistent and disciplined approach to bidding for future business throughout the Group, with the recent award of the South Western rail franchise being a good example of our focus on the service quality improvements our customers and communities tell us they want.

"Meanwhile, we continue to increase our use of technology across the Group to make it easier for passengers to use our services, and to deepen our understanding of our customers evolving needs. "Looking ahead, our financial objectives are to make further progress while maintaining our focus on cash generation, despite the mixed trading environment in our markets.

"Overall this year's results demonstrate the progress we have made in repositioning FirstGroup to deliver for our customers while creating value for our shareholders, commensurate with our leading market positions and scale."

Taken a bit of a slapping in early deals, down 6.5%.

Canaccord comment today:
"Full year results for the year to 31 March 2017 were better than expected, primarily due to better performances in North America. Net cash inflow was £147m (£36m before franchise outflows). The share price has risen strongly in recent months, up 22% since it announced the South Western rail franchise win on 25 March and supported by a stronger dollar. The company, however, continues to carry a significant debt burden and cash inflows are expected to be held back by the need for ongoing pension payments in excess of P&L charges (£38m in 2017 and could rise going forward). With a dividend reinstatement likely for 2018 and beyond, the ability to make bolt-on acquisitions in North America in order to supplement contract losses appears relatively restricted if the company aims to reduce debt levels materially.

Profit expectations for UK Bus, Transit and Greyhound remain sluggish in the near term and First Student profit growth is likely to decelerate as margins approach 10% and the ability to achieve further contract price increases diminishes (First Student accounted for 44% of group operating profit in 2017). UK Rail should clearly benefit from the SWT franchise win, although underlying market conditions in UK rail remain challenging. The shares are trading at a prospective P/E of 11.6x, a 24% premium to its 5 year historical average."

Liberum Capital today reaffirms its buy investment rating on FirstGroup PLC (LON:FGP) and raised its price target to 165p (from 150p).

StockMarketWire.com
Firstgroup reported revenue growth across most its divisions but Greyhound like-for-like revenues declined weighed by airline competition.

The company said all three of its North American divisions encountered extremely challenging weather conditions in January, and added that its outlook for adjusted EPS fell.

The company also said that its bond refinancing was underway with $275m raised in US private placement market, and added that it expects its September 2018 bond to be redeemed before financial year end which could bring approximately £14m in interest savings from next year.

The company reported revenue growth in its First Student division while Greyhound and First Transit came under pressure during the period.

First Student's revenue rise 0.3% in the period amid price increases introduced during last summer' bid season, but this was partially offset by the school days cancelled due to the severe snowstorms in early January.

First Transit's revenue fell 0.1% in the period following further reductions in service volumes in the Canadian oil sands region.

Greyhound's like-for-like revenue declined by 2.8% in the period, as strong growth in the shorter point-to-point markets was more than offset by intensifying challenges in the larger long-haul segment amid low-cost airline competition

First Bus delivered like-for-like passenger revenue growth of 1.4% with like-for-like passenger volumes rising 0.1% in the period.

First Rail's like-for-like passenger revenue growth was 3.2% in the period.

The group said it expects US tax changes to reduce its effective tax rate to mid-20's percentage.

FirstGroup Chief Executive Tim O'Toole said: 'We reached an important milestone in the period with our long-dated bond portfolio beginning to mature, allowing us to significantly reduce our interest burden by starting to refinance and rebalance the Group's debt.'

'We are pleased by the support shown in the credit market for our improved financial profile and disciplined strategy.'

'In the period First Bus has made encouraging margin progress as we benefit from our cost efficiency actions and revenue growth, while our First Rail franchise portfolio continues to generate value for the group despite infrastructure challenges'

'First Student's momentum continues to be tempered by the strength of the US employment market, with no easing of the driver shortages experienced in recent years, while First Transit has taken a number of actions to help restore margins in the second half as planned. Although Greyhound's point-to-point business continues to grow, this was more than offset by significant reductions in long-haul volumes in the period.'

StockMarketWire.com
Shares of rail and bus operator FirstGroup slumped on Tuesday after buyout firm Apollo said it would not make an improved bid after its advances were rejected last month.

FirstGroup revealed last month it had rejected an offer from Apollo, which it claimed 'fundamentally undervalues' the company.

Jefferies comment:
"We thought the combination of already high group debt, pension liabilities, two new rail franchises (SWR and TPE) won on full growth assumptions and the shrink-to-grow strategy nearing completion at Student (the group’s growth driver for many years) would all challenge a bid for FGP. The UK political dimension too would also have raised the risks. Additionally, we feel UK Rail needs to sit within larger groups to absorb downside scenarios should these contracts prove to develop into liabilities rather than the asset hoped for at bid. This would have frustrated any break-up scenarios worked through, alongside the long dated nature of the group’s debt. Splitting up FGP into US and UK holdings, for example, would leave rail sitting alongside a weak bus unit (how to allocate debt to that?) and unless a larger group could be found as a trade buyer (we think unlikely), it's not obvious to us that this represents an attractive standalone proposition.
Investors may hope that the experience of the Apollo interest will drive new impetus for change at FirstGroup. However, after years of current management struggling to turn this group around, it’s difficult to see what more they (or indeed others) can do. FirstGroup’s problems, in our view, stem all the way back to its pursuit of scale at the expense of its core (under-investment in UK Bus) culminating in the Laidlaw acquisition (2007) which has ultimately burdened it with too much debt. Market conditions have not been kind to it (its diversified exposures have seen headwinds roll through different parts of the group at different points). Perhaps, like Student, margin opportunities in both UK bus and Greyhound could be more aggressively pursued though shrink-to-grow-strategies, but there’s implication for scale there and FGP must remain mindful of its debt levels. Our sense remains that the recovery prospect at FGP is likely to remain a slow burn long term scenario, and reducing net debt should be the priority for cash generation (rather than dividend hopes that seem to have formed in some segments of the market)."

StockMarketWire.com
FirstGroup said Thursday that CEO Tim O'Toole resigned from his position as CEO as the company revealed its annual results showing adjusted profit before tax fell 4.8% to £197m for the year to the end of March despite a 13.2% jump in revenue.

Adjusted operating profit fell 10.4% excluding SWR and 53rd week.

The firm blamed the poor performance on Greyhound long haul challenges, severe weather effects on both sides of the Atlantic in the final quarter and ongoing US driver shortages. This was partially offset by good performances in UK divisions, the company said.

Greyhound like-for-like revenue fell 0.7%, as 7.7% growth in express (short haul) growth was insufficient to offset long haul demand challenges from intensifying airline competition, which saw the adjusted margin fall to 3.6%

'In the year, our largest division First Student was broadly stable and First Bus took an encouraging step forward in its margin improvement plans,' the company said.

'This was offset by the cost challenges experienced by First Transit in the first half and by Greyhounds inability to overcome the structural shift taking place in its long haul markets, as ultra low cost airlines significantly increase capacity and extend into new markets.'

The company reported a statutory loss before tax of £326.9m for the year compared with a profit of £152.6m last year, reflecting £277.3m Greyhound goodwill and other asset impairments, £106.3m TPE onerous contract provision and other adjusting items.

The company also said it expected an overall improvement in road margins and returns, would be offset by a smaller contribution from the First Rail portfolio, resulting in broadly stable group earnings in constant currency.

Deutsche Bank today reaffirms its hold investment rating on FirstGroup PLC (LON:FGP) and cut its price target to 83p (from 90p).

Liberum Capital today reaffirms its buy investment rating on FirstGroup PLC (LON:FGP) and cut its price target to 110p (from 125p).

Possible interest of FGP being aquired:
https://www.bloomberg.com/news/articles/2018-09-06/firstgroup-is-said-to-draw-private-equity-interest-including-cvc