First Group Final results 2011/12 - dividend announced

FirstGroup PLC Final Results for the year to 31 March 2012

Overall trading for the Group in 2011/12 in line with our expectations; net cash inflow of GBP119.2m

• First Student - now well set on path to recovery; plan delivering in line with targets, stabilised operating margin in H2
• First Transit - continued good returns from low capital requirements and established credentials
• Greyhound - business is now transformed, strong growth with operating profit more than doubled over last 2 years
• UK Rail - solid performance; entering transition period for UK rail, only operator shortlisted for all four of the current competitions
• UK Bus - steady performance during year; expect margins in 2012/13 to be significantly affected by deteriorating economic conditions particularly in the North of England and Scotland and reduced funding to the industry; executing comprehensive plan to reposition the portfolio and restore performance
• Dividend increase of 7.0% in line with current policy 

Commenting, FirstGroup's Chief Executive, Tim O'Toole said:

We have a fundamentally strong and diverse portfolio of operations with four out of five of our divisions performing in line with our expectations and actions we have taken will lead to improved growth and returns. Notwithstanding the steady performance from our UK Bus division in 2011/12 we have seen a further deterioration of economic conditions particularly in our urban operations in Scotland and the North of England. As result, we do not expect revenue growth and cost efficiencies in 2012/13 to be sufficient to offset the impact of reduced government subsidies and funding to the industry, which are more acute than originally estimated, and increased fuel costs. In response we are accelerating a comprehensive plan that will deliver sustainable growth in revenue and patronage and improved returns. This includes repositioning our UK Bus portfolio through a programme of business and asset disposals to focus on those areas where the greatest potential for growth exists. 

Our North American operations continue to progress and we believe that improving trends in the US economy will be positive for our businesses. First Student is now well set on the path to recovery with our plan to reform the business delivering in line with our expectations. First Transit delivers good returns from typically low capital nvestment which is underpinned by its established credentials and strong track record. Greyhound's enhanced performance from a transformed operating model demonstrates our ability to implement the necessary actions to deliver strong growth and margin improvement. 

The UK rail market is in a period of transition with eight franchises due to be let by the Government over the next two years. We are the only operator to have pre-qualified for all four of the rail franchises that have come to the market so far and we believe we are well placed to progress opportunities from the refranchising programme. 

The combined effect of the outlook for trading together with the actions to reposition the UK Bus portfolio is expected to result in the Group's net cash flow being broadly neutral in 2012/13. Our market leading positions in a sector that is a key enabler of economic growth together with the actions we are taking to strengthen the business give the Board confidence that the Group has good prospects to deliver long term value for shareholders. Therefore, reflecting our longer term view, the Board remains committed to its current policy of dividend growth of 7.0% through to the end of the financial year 2012/13.