Franchise losses depresses FirstGroup results
FirstGroup results for the six months ended 30 September 2015 were in line with management expectations, says chief executive, Tim O’ Toole. Results were depressed compared to H1 2014, partly due to the termination of the First Capital Connect (FCC) and First ScotRail (FSR) passenger franchises (in September 2014 and March 2015 respectively).
Group revenue was 17% down at £2.441bn (H1 2014: £2.941bn); the adjusted EBITDA (earnings before interest, tax, depreciation & amortisation) fell 4.3% to £242.4m (H1 2014: £253.3m), though the EBITDA margin improved to 9.9% from 8.6%. The unadjusted group operating profit (which included amortisation of £27.2m) dropped 27.8% to £58.5m (H1 2014: £80.2m). FG made an unadjusted loss before tax of £7.5m (H1 2014: £9.9m profit); a £4.4m tax credit reduced the loss after tax to £3.1m (H1 2014: £7.5m profit).
Net debt increased 13.2% to £1.588bn (H1 2014: £1.403bn). Return on capital employed fell to 7.1% (as against 7.8% at 31 March 2015). Group capital expenditure was 21.6% down at £201.9m (H1 2014: £257.5m).
First Group has five main business divisions: First Student, First Transit, Greyhound, First Bus and First Rail. The first three are based in North America, and in H1 2015/16 collectively accounted 56.8% of adjusted group revenue, and 65.5% of the adjusted group operating profit.
First Bus: Adjusted revenue fell 2.6% to £437.5m (H1 2014: £449.2m). Adjusted operating profit decreased 8.9% to £15.4m (H1 2014: £16.9m); and the operating margin fell from 3.8% to 3.5%. FG incurred a £1.7m charge on the sale of closed bus depots. Commercial passenger revenue grew by 2.2%, and overall like-for-like revenue growth was 1.3%.
First Rail: Adjusted revenue decreased 47.3% to £608.9m (H1 2014: £1,156m). The adjusted operating profit declined by 17.7% to £32.9m (H1 2014: £40.0m), but the operating margin improved from 3.5% to 5.4%. Passenger revenue grew by 18.7% (for Hull Trains); by 6.8% (for FGWR); and by 6.6% (for First TransPennine Express). GWR premiums increased to £55.8m (H1 2014: £53.7m), but the subsidy paid to FTPE was more than halved to £11.5m (H1 2014: £24.8m).