# FirstGroup expect FY 2023 profit ahead of the Group’s previous expectations

- Link: https://www.directorstalkinterviews.com/firstgroup-expect-fy-2023-profit-ahead-of-the-group%e2%80%99s-previous-expectations/4121109535
- Published: 2023-03-10T10:11:14+00:00
- Author: Olivia Thompson

**FirstGroup plc** (LON:FGP) today reported an update on trading since the half-
year results for the 26 weeks to 24 September 2022, published in November 2022.

 * First Bus improved performance driven by higher passenger volumes in H2 2023 
   and driver resource pressures easing in certain locations
 * First Rail open access operations benefiting from stronger than anticipated passenger
   demand over the winter months
 * Acquisition of Ensign Bus Company Limited (‘Ensignbus’) completed
 * Sale of First Transit by EQT Infrastructure completed with final earnout consideration
   anticipated later in 2023

**First Bus**
Recent First Bus passenger volumes have increased to 83% of 2020 equivalent
levels, with commercial and concessionary volumes at 87% and 75% respectively. The
increase in demand has partially resulted from the £2 bus fare cap scheme introduced
in England in January 2023, recently extended to the end of June 2023, and the Scottish
Government’s funding for free bus travel for all under-22s that has been in place
since January 2022.

First Bus has also benefited from improved driver resources in certain locations,
with increased recruitment largely due to a number of initiatives introduced across
the business, with more drivers completing their training and lower rates of attrition.

In addition, we welcomed the Government’s extension of the Bus Recovery Grant in
February 2023, which will help protect vital services for passengers for a further
three months. We continue to work with our government and industry partners on long-
term funding arrangements for the sector.

**First Rail**
Our open access operations Lumo and Hull Trains, which are the only
segment of the First Rail division where the Group takes full passenger revenue 
risk, have experienced stronger than anticipated passenger demand throughout H2 
2023. The First Rail division has also benefited from the settlement of one-off 
claims relating to prior reporting periods.  

**FY 2023 Guidance**
As a result of the factors detailed above, the Group anticipates
that the FY 2023 Group adjusted operating profit and Group adjusted attributable
profit will be ahead of the Group’s previous expectations. The Group’s expectations
for FY 2024 remain unchanged.

The Group expects to report its results for the year ended 25 March 2023 on 8 June
2023.

**Completion of acquisition of Ensignbus**
Following the conclusion of a customary
regulatory review, the Group completed the acquisition of Ensignbus on 9 March 2023.
The Ensignbus business includes commercial bus operations in Essex, a vehicle refurbishment
and re-sale operation, and a high value depot. The acquisition of this long-established,
high-performing business will not only provide a number of synergies and value accretive
growth opportunities in the B2B and bus vehicle dealership markets, but it will 
also enhance the Group’s local commercial bus operations in Essex.

**Update on First Transit Earnout**
Further to the Group’s announcement on 26 October
2022, the Group notes that EQT Infrastructure’s sale of First Transit to Transdev
North America, Inc. has now completed.

FirstGroup is entitled to an earnout consideration which is calculated as a percentage
of the realised equity value on the disposal and contemplating the cash flows generated
by First Transit since March 2021 to completion. As previously announced, the Group
currently estimates the earnout consideration to be approximately £74m. The Group
anticipates confirmation of the earnout consideration and subsequent receipt of 
proceeds later in 2023.  

> **Graham Sutherland, FirstGroup Chief Executive Officer, said:**
> “I am pleased
> by the Group’s progress in the second half of our 2023 financial year, which has
> been driven by increased passenger volumes and improved operational performance
> in bus and stronger than anticipated demand for our open access operations in 
> rail. We remain committed to working closely with our partners to deliver successful
> bus and rail networks that serve the needs of our customers and communities and
> to playing a central role in achieving many of society’s economic, social and 
> environmental aims.”

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