Trading Statement

2 April 2014 FIRSTGROUP PLC PRE-CLOSE TRADING UPDATE FirstGroup plc ("FirstGroup" or the "Group") reports the following update ontrading for its financial year ended 31 March 2014 ("the period" or "theyear"), ahead of preliminary results due to be announced on 21 May 2014. Summary • Overall operating profit in line with expectations for the year, excluding£14m impact of unprecedented weather conditions on First Student and Greyhoundin the fourth quarter • First Student progressing plans to improve contract portfolio pricing,returns and deliver further cost savings • First Transit maintains its record of growth and margin performance • Greyhound - underlying improvement in demand and profitable expansion ofGreyhound Express continues • UK Bus - transformation plan progressing and delivering sustainableimprovements in key metrics • UK Rail delivering solid revenue growth underpinned by continued passengervolume increases • As previously indicated, net cash flow expected to be broadly flat for theyear (excluding the proceeds of the rights issue) First Student First Student's performance was adversely impacted by the abnormal weatherconditions which swept across North America from December and continued intoMarch. US Dollar revenue is expected to be reduced by 1.8% for the year aswidespread snow storms, coupled with record low temperatures, led to anunprecedented amount of school closures. Most of our operations were affectedwith over 4,000 school days lost across 75% of our territory, and we incurredhigher associated operating costs. As a consequence, our operating margin forthe year is expected to be approximately 1% below the levels previouslyindicated in our Q3 interim management statement. As detailed at our investorday in January, we are working through our programme to meet our medium termtargets, which includes addressing contract portfolio pricing, focusing onhigher returning opportunities and driving further cost efficiencies throughthe business. First Transit First Transit delivered another year of strong trading, with like-for like USDollar revenue growth expected to be over 7% and margins in line withexpectations. Our strong credentials and expertise in delivering efficienciesfor customers continue to be rewarded with new business wins and a contractretention rate of around 95%. Greyhound Greyhound's overall US Dollar revenue is expected to be 2.9% lower for theyear, reflecting the impact of severe weather which caused significantdisruption to the network. Excluding weather, like-for-like revenue in thefourth quarter of the financial year is expected to be approximately 2.1%higher, in part reflecting modestly improving economic conditions. GreyhoundExpress continues to perform well with anticipated like-for-like revenueincreasing by over 10% for the year. We are on track with our investmentprogramme, which will transform our offering principally through greater yieldmanagement, real-time pricing and more consumer friendly ticketing. Thisfocused investment, together with the continued growth of our successfulpoint-to-point products, gives us confidence in achieving our medium termmargin target of 12%. UK Bus Like-for-like passenger revenue growth is expected to be 1.8% for the year,with good passenger volume growth. This encouraging performance is despite thecontinued challenges posed by economic conditions in some of our local markets.We continue with our step-by-step plan to reposition the business throughnetwork design and fares structure improvements, further cost optimisation, andinvestment in fleets and technology. Over the medium term, this repositioningwill allow us to raise margins to double digit levels. We were pleased toreceive validation by Passenger Focus of our efforts to improve the quality andvalue-for-money of our services in their recent survey of bus passengers acrossthe UK. UK Rail UK Rail continued to perform well during the year, with like-for-like passengerrevenue expected to increase by 5.9%, underpinned by continued strong volumegrowth across all of our train operating companies. We worked closely with ourindustry partners to mitigate the effects of severe weather and flooding onparts of our network and ensure that services resumed as quickly as possible.In March, the Department for Transport commenced a review in respect of alonger direct award with First Great Western, to cover the significantprogramme of works taking place across the network over the coming years. Exceptional items The Group has reviewed its treatment of exceptional items, in particular costsassociated with UK Rail bids and certain property disposals. As a result, wewill include these items in our measure of underlying results in the financialstatements for the year ended 31 March 2014. Commenting, Tim O'Toole, Chief Executive said: "We have made satisfactory progress on our key priorities in the year, withgood performances in four of our divisions partially offset by slower progressin First Student, where we have a detailed programme underway to reposition thecontract portfolio, increase returns and drive further cost efficiencies. Wewill deliver earnings growth this year, albeit suppressed by the historicallysevere weather, particularly in North America. We are broadly on track toachieve our medium term targets and while we are encouraged by the progressmade so far, there remains a significant amount of work ahead. Our prioritiesare clear and plans are underway to build on our market-leading positions andensure the Group delivers sustainable cash generation and value creation overthe plan period and beyond." A conference call for analysts and investors will be held at 8:00am today. Please call +44 20 20 7725 3354 in advance of the call to register and to receive joining details. Contacts at FirstGroup:Rachael Borthwick, Group Corporate Communications DirectorFaisal Tabbah, Group Investor Relations ManagerStuart Butchers, Group Media Relations ManagerTel: +44 20 7725 3354 Contacts at Brunswick PR:Michael Harrison/Andrew Porter, Tel: +44 20 7404 5959 The information provided in this trading update is preliminary and has not beenreviewed by the Group's auditors. FirstGroup plc (LSE: FGP.L) is the leading transport operator in the UK andNorth America. With revenues of more than £6 billion and around 120,000employees, we transport more than 2.5 billion passengers every year. Each ofour five divisions is a leader in its field: First Student is the largestprovider of student transportation in North America with a fleet of around50,000 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 6,500 buses, and we operate approximately aquarter of the UK passenger rail network, carrying over 310 million passengersa year. Our vision is to provide solutions for an increasingly congested world… keepingpeople moving and communities prospering.

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