Trading Statement

1 April 2015 FirstGroup plc 2014/15 Pre-Close Trading Update FirstGroup plc (the "Group") reports the following update in respect of tradingfor the financial year ended 31 March 2015 (the "year"), ahead of preliminaryresults due to be announced on 10 June 2015. Summary Overall trading for the Group in the fourth quarter was in line withmanagement's expectations, and our transformation plans continue to progress: * First Student: second year of contract pricing strategy achieving improved terms to date; fourth quarter trading modestly affected by adverse weather in the North Eastern US * First Transit: solid fourth quarter completes another year of growth and margin performance * Greyhound: actively managing cost base to mitigate contraction in passenger demand from cheaper fuel; yield management implementation on track * UK Bus: delivering volume growth and achieving positive yield, with progress on cost efficiencies * UK Rail: passenger demand continues to drive revenue and earnings outperformance; First Great Western and First TransPennine Express franchise agreements signed Commenting, Chief Executive Tim O'Toole said: "Overall trading for the year is in line with our expectations and we continueto make progress with our multi-year transformation plans, which will improvethe Group's financial performance and ensure we deliver sustainable valuecreation in the medium term. "The pricing improvements we made in the 2014 bid season together with furthercost savings mean we expect to make solid margin progress in First Student forthe year, and we are also encouraged by the results achieved at this stage inthe 2015 bid season. In UK Bus we continue to deliver passenger volume growth,positive yield and further cost efficiencies. Greyhound has flexed mileage,timetables and pricing in response to the rapid reduction in passenger demandfrom lower fuel prices and is on track with the yield management programme,while our First Transit and UK Rail businesses have maintained the good growthmomentum and margins achieved throughout the year. In recent weeks we weredelighted to secure a contract to operate the Great Western franchise for up tofour and a half years, and will continue to work closely with the Departmentfor Transport and Network Rail to deliver the £7.5bn Great Western Mainlinemodernisation programme. We have also signed an agreement to run theTransPennine Express franchise through to 1 April 2016, and look forward tosubmitting our bid for the new franchise later in the spring. "In early March we were pleased to announce that Wolfhart Hauser will join theBoard of FirstGroup in May, and will become Chairman following our AGM in July.Wolfhart has an exemplary track record of sustained value creation and hisexperience and counsel will be invaluable as we drive forward thetransformation of the Group. I would also like to thank John McFarlane for theimportant contribution he has made during his tenure and wish him every successas Chairman of Barclays." First Student US Dollar revenue in First Student is expected to be 1.3% higher for the year,principally benefitting from our successful pricing strategy during the 2014bid season and modest organic growth. As anticipated, our overall bus portfolioat the end of the year is broadly similar to the prior year. The 2015 bidseason is the second year of our strategy to improve contract returns, withapproximately one third of our bus portfolio up for renewal. We continue tofocus on only winning or retaining contracts at prices that deliver anappropriate return on capital employed, and are encouraged by the results weare achieving at this stage of the bid season. In the year we have taken actionto deliver approximately $20m of our $50m per annum cost savings target asplanned. The full benefits of our pricing strategy and cost savings will bepartially offset this year by the adverse weather conditions in the NorthEastern US in the fourth quarter, but despite this headwind we expect todeliver margins of approximately 7.5% for the year, and are confident ofdelivering our double digit margin target in the medium term. First Transit As previously indicated, First Transit has achieved organic growth on existingcontracts in the second half that was towards the top of our planning range. Asa result US Dollar revenue growth for the year is expected to be 5.5%. Wecontinue to expect margins of around 7% for the year and into the medium termin this low capital intensity business. Greyhound In the fourth quarter, Greyhound's like-for-like US Dollar revenues areexpected to decrease by 5.5%, reflecting the adverse effect on customer demandfrom sharply lower fuel prices, which improves the affordability of other formsof transport for some trips compared with Greyhound. As a result US dollarrevenue for the year is expected to be flat. Greyhound is actively managingmileage, timetables and pricing in response to changed market conditions. Givenrecent levels of activity we expect margins for the year will be modestly belowthe prior year level. Greyhound Express revenues have been more resilient, withlike-for-like US dollar revenues expected to increase by 3.0% for the year. Ourproject to roll out real-time pricing and yield management capabilities acrossour nationwide network continues to progress as planned and we remain confidentof achieving our 12% margin target, recognising that long term oil price trendsmay impact the timing. UK Bus Our UK Bus transformation programme continues to deliver like-for-likepassenger volume growth, expected to increase by 1.1% for the year, despite themixed economic conditions across the division. Our plans are particularlyfocused on driving commercial passenger volume growth, which is expected toincrease by 2.6% on a like-for-like basis for the year. Now that many parts ofour business have reached the anniversary of our fare rebasing actions, revenuegrowth is also expected to benefit from positive yield from periodic priceincreases in line with the market. As a result, overall like-for-like revenuegrowth is expected to be 2.3% for the year. This growth, coupled with our costefficiency programmes, is expected to result in margin progress ofapproximately 1% for the year, as we continue to work toward our medium termtarget of double digit margins. We believe that our strategy, which is based on delivering a competitivecustomer proposition coupled with improved operating discipline and strongpartnerships with local authorities, is the most responsive, efficient andcost-effective way to deliver the outcomes that bus passengers and taxpayerswant. Our confidence is reinforced by the validation of our efforts to improveour customer proposition as measured in the recent Passenger Focus survey ofbus users across the UK - particularly on value for money, where our score hasimproved by 17% over two years and is now above the national average. UK Rail Strong demand continues to drive passenger volume and revenue growth in ourrail business, with like-for-like passenger revenue expected to increase by6.6% for the year, at the top end of our expectations. We recently signed anagreement with the Department for Transport ('DfT') to run the First GreatWestern franchise to at least 1 April 2019. The franchise will see new orrefurbished trains on every part of the network, resulting in more frequent andfaster journeys and an increase in the number of seats over the period to theend of the decade. We also recently signed an agreement with the DfT to runFirst TransPennine Express for an additional year to the start of the nextcompetitive franchise, expected on 1 April 2016. We continue to progress ourbid proposal for that competition, which will be submitted towards the end ofMay. We have been, and will continue to be, disciplined in our approach tobidding for UK rail franchises which aims to balance appropriate returns at anacceptable level of risk. Financial position We expect a total cash outflow for the current financial year of up to £100m,which is principally due to the cash outflow of approximately £70m associatedwith the end of the First Capital Connect franchise in September 2014. Aspreviously indicated, we expect net cash flow for our next financial year to bebroadly flat excluding an outflow of approximately £60m associated with the endof the ScotRail franchise. As our plans continue to drive improvements in ourreturns, we expect the sustainable cash generation of the Group to increaseover the medium term, which in turn will allow us to continue to strengthen theGroup's financial position. We are part way through a multi-year programme ofinvesting at an increased rate in our businesses to support the turnaround infinancial performance, and over time we expect our financing costs to continueto reduce, as cash generation increases and our relatively high coupon bondsmature. A conference call for analysts and investors will be held at 9:00am today. Please call +44 20 7725 3354 in advance of the call to register and receive joining details. Contacts at FirstGroup:Rachael Borthwick, Group Corporate Communications DirectorFaisal Tabbah, Group Investor Relations ManagerStuart Butchers, Group Head of MediaTel: +44 20 7725 3354 Contacts at Brunswick PR:Michael Harrison / Andrew Porter, Tel: +44 20 7404 5959 Notes Unless otherwise stated, all financial figures refer to the twelve month periodended 31 March 2015 (the "year"), with growth compared to the same period to 31March 2014. The '"fourth quarter" refers to the three month period ending 31March 2015. No account is taken of foreign exchange translation effects in thedescription of divisional performance and outlook. Recent US dollar exchangerate movements have an impact at the adjusted operating profit level but thenet impact at the adjusted earnings per share level is not significant due tothe Group's natural hedge, whereby exposure to US dollar earnings in the NorthAmerican divisions is largely offset by US dollar denominated fuel purchasesfor the UK businesses, together with some US dollar denominated interest andtax costs. Figures presented in this announcement are not audited. Certain statementsincluded or incorporated by reference within this announcement may constitute"forward looking statements" in respect of FirstGroup's operations,performance, prospects and/or financial condition. Such statements are based onFirstGroup's current expectations and beliefs concerning future events and aresubject to a number of known and unknown risks and uncertainties that couldcause actual events or results to differ materially from any expected futureevents or results referred to in these forward looking statements. Suchstatements are also based on numerous assumptions regarding FirstGroup'spresent and future strategy and the environment in which we operate, which maynot be accurate. FirstGroup undertakes no obligation to update any forwardlooking statements contained in this announcement or any other forward lookingstatements we may make. Nothing in this announcement should be construed as aprofit forecast. Past performance cannot be relied upon as a guide to futureperformance and persons needing advice should consult an independent financialadviser. FirstGroup plc (LSE: FGP.L) is the leading transport operator in the UK andNorth America. With revenues of more than £6.7 billion in 2013/14 and around110,000 employees, we transported around 2.5 billion passengers last year. Eachof our five divisions is a leader in its field: First Student is the largestprovider of student transportation in North America with a fleet of around49,000 yellow school buses, First Transit is one of the largest providers ofoutsourced transit management and contracting services in the US, whileGreyhound is the only national operator of scheduled intercity coach servicesacross North America. In the UK, FirstGroup is one of Britain's largest busoperators running a fleet of some 6,400 buses, and we are one of the largestoperators of passenger rail services in the UK, carrying more than 330 millionpassengers last year, with experience of running all types of rail network. Our vision is to provide solutions for an increasingly congested world...keeping people moving and communities prospering.

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