FirstGroup makes good despite franchise losses
FirstGroup has expressed satisfaction with the financial performance of its UK rail division following publication of the results for the year ended 31 March 2016.
FirstGroup has five main business divisions: First Rail; First Bus; First Transit; First Student; and Greyhound. The two former divisions are UK based; the other three are confined to North America.
The UK rail division accounts for approximately one quarter of all group revenue; the UK bus contributes for about one sixth. The two divisions make up broadly similar portions of group profits.
Group revenue for 2015/16 fell 13.8% to £5.218bn (2014/15: £6.051bn); group EBITDA was 1.4% down at £615.9m (2014/15: 624.4m); group operating profit also declined 1.0% to £300.7m (2014/15: £303.6m); but group operating margin slightly improved to 5.8% (2014/15: 5.0%). The group profit before tax improved 2.7% to £168.3m (2014/15: £163.9m).
Group net debt remained constant at £1.410bn (2014/15: £1.047bn); net finance costs fell 5.2% to £132.4m (2014/15: £139.7m). Return on capital employed (ROCE) declined slightly to 7.2% (from 7.4%).
The UK rail division –now down to the Great Western Railway and TransPennine Express(TPE) franchises plus open access operator Hull Trains(HT) – recorded a 40.7% drop in revenue to £1.308bn (2014/15: £2.207bn). Operating profit dipped 1.6% to £72.9m (2014/15: £74.1m), but the operating margin improved 5.6% (2014/15: 3.4%).
The revenue fall reflected FG’s loss of the First Capital Connect (Thameslink) franchise to Govia in September 2014, and also that of First ScotRail to Abellio in March 2015.
Changes to pension contributions boosted the rail operating profit by £18.6m.
Revenue growth was down for both franchises: GWR 6.1% (2014/15: 6.7%) and TPE 6.0% (2014/15: 6.4%), but Hull Trains improved 15.8% (2014/15: 12.8%). Revenue growth for the rail division as a whole was 6.3% (2014/15: 6.7%).
Like-for-like passenger volume growth was 2.9% for 2015/16.