FirstGroup results: UK revenues down but profits up

First Group (FG) revenue fell 9.9% to £6.051bn (2014: £6.717bn) for the year ended 31 March 2015. Group operating profit increased 5.9% to £245.8m (2014: £232.2m), but profit before tax rose 80.9% to £105.8m (2014: £58.5m). Lower finance costs are the main reason for the big increase.

Net debt is up 7.9% at £1.407bn (2014: £1.304bn).  Group ROCE (return on capital employed) is down slightly to 7.8% from 8.2%. FG hopes to achieve 10-12% ROCE in the medium term.

FG has five main divisions: UK bus and UK Rail account for around one half of group turnover (the three other divisions are based in North America).

UK Bus:  Passenger revenue fell 3.7% to £896.1m (2014: £930.2m), largely reflecting the businesses disposals of the previous year. Operating profit was 16.7% up to £51.8m (2014: £44.4m), and the operating margin improved to 5.8% from 4.8%. Like-for-like passenger revenue was 2.3% higher, and like-for-like passenger volume increased 1.1% (2.6% for commercial services, supported services recorded less).

UK Rail: Passenger revenue fell 23.1% to £2.207bn (2014: £2.870bn). Revenue support for the First Great Western and First Capital Connect franchises ended during the year, and the latter franchise terminated in September.  Subsidises to First ScotRail were reduced (but matched by a reduction in track access charges paid to Network Rail so does not affect the operating profit). FG has also lost ScotRail which franchise passed to Abellio on 1 April.

Operating profit increased 34.2% to £74.1m (2014: £55.2m), and the operating margin improved to 3.4% from 1.9%. Like-for-like passenger revenue improved by 6.7%, and like-for-like passenger volume was 4.2% up.

674/Jun 15


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