Annual Report and Accounts Annual Report and Accounts

61 Pages·2011·3.64 MB·English

AAnnnnuuaall RReeppoorrtt
aanndd AAccccoouunnttss
22001111
Financial highlights
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FirstGroup plc is the leading transport n
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operator in the UK and North America.
With revenues of over £6 billion a year, we
employ approximately 125,000 staff and
transport over 2.5 billion passengers
every year.
s
or
ct
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Dir
Our commitment to safety and customer e
h
Revenue Adjusted EBITDA1 Adjusted operating profit2 of t
service lies at the heart of our business £6,429.2m £778.2m £457.4m ort
p
e
R
and underpins everything we do. 2010: £6,261.9m 2010: £763.9m 2010: £449.6m
Operating profit Adjusted profit before tax2 Profit before tax
£309.3m £275.0m £127.2m
2010: £364.2m 2010: £259.7m 2010: £175.3m
Adjusted basic EPS2 Basic EPS Proposed final dividend per share
Operating and financial review Report of the Directors Financial statements
41.2p 21.4p 15.0p
1 Financial highlights 34 Board of Directors 54 Consolidated income statement
2 Chairman’s statement 36 Corporate governance 55 Consolidated statement of
4 Our business 44 Directors’ remuneration report comprehensive income
2010: 38.9p 2010: 26.9p 2010: 14.0p
6 Our strategy 50 Directors’ report 56 Consolidated balance sheet
s
7 Key performance indicators 53 Directors’ responsibilities statement 57 Consolidated statement of nt
8 Market overview: First Student changes in equity me
10 Market overview: First Transit 58 Consolidated cash flow statement Net debt3 1 Adjusted operating profit plus depreciation. e
12 Market overview: Greyhound 59 Notes to the consolidated financial £1,949.4m 2 Banedfo dreis acmonotrintiusaetdio onp cehraatrigoenss,. iAnlel frfeefcetrievennceess st oo n‘a fidnjuasntceida’l fidgeurirveast ivtherso,u ngohno-uret cthuirsr inregp iotertm asr,e l odsesfi noend d iins pthoissa wl oafy .properties stat
14 Market overview: UK Bus statements 3 Net debt is stated excluding accrued bond interest. al
16 Market overview: UK Rail 105 Independent auditors’ report ci
18 Chief Executive’s operating review 106 Group financial summary Where appropriate, 2010 comparatives have been restated to exclude discontinued operation as explained in note 2 to the an
2010: £2,281.5m consolidated financial statements. n
28 Finance Director’s review 107 Company balance sheet Fi
108 Notes to the company financial
statements
114 Independent auditors’ report
115 Glossary
116 Shareholder information
117 Financial calendar
FirstGroup Annual Report and Accounts 2011 1
Chairman’s statement
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Tthhee sinchoepree natn dst rdeinvegrtshi toyf othf eit sG proourtpfo clioom oef s from Aregmaaininste dth fier mbalyc kfodcroupse odf oconn otiunru keedy epcroionroitimesic i nucnlucderintagi nthtye wdey namic TI aimm jodienlsig thhtee dG troo uhpa vaet aat striagcntieficda an tle satdagere oinf hitiss dceavlieblroep wmheon th. a s the Dividend per share (pence) eratin
management of our networks, continued cost control and further experience, track record and vision to lead the Group on to further Progressive dividend growth since 2004. Op
operations which enabled us to achieve our
efficiencies to develop and improve margins. A strong performance successful development. His extensive knowledge of transport
22.12
overall targets for the year with increased net from our UK Rail operations offset a disappointing result from markets in the UK and North America will be invaluable, not only in 20.65
cash supporting dividend growth, a reduction our First Student business which continues to face pressure on steering the immediate course ahead but also in ensuring that the 18.75
17.05
operating margin as a result of constraints on school board budgets. Group is well placed to maximise future growth opportunities and
in net debt and increased capital investment 15.50
We are taking decisive action to address First Student with a detailed extend its leadership position. 14.10
in the business. 12.81
plan to recover performance and create a stronger business model 11.65
I would like to offer my sincere thanks and gratitude to all of our
that will deliver a sustainable advantage in the longer-term.
employees for their hard work and continued commitment during
I am pleased by the further advances we made in reducing net the year. In particular, I would like to acknowledge the extraordinary
debt. We delivered our target ratio of 2.5 times net debt to EBITDA efforts made by our employees to assist passengers during
at 31 March 2011 demonstrating good progress over the year. the widespread disruption caused by the severe winter weather
We also strengthened our financial foundation in December 2010 conditions. We recognise that, as the face of our business, their
with the signing of $1.4bn of five year committed bank facilities to ongoing dedication to providing safe and high quality services to 2004 2005 2006 2007 2008 2009 2010 2011
replace existing revolving bank facilities that were due to mature in customers is vital to our continued success.
February 2012. This proactive management supports the maturity
With operations that are fundamentally strong and new leadership
of our debt portfolio and prudent levels of liquidity over the
with a clear focus on creating a stronger business and developing
medium-term. We are delighted by the continued strong support
opportunities for growth, the Board is confident that the Group has
from our relationship banks demonstrating the confidence in the
good prospects in all of its core markets and will continue to deliver
Group’s underlying strength and resilience.
long-term value for shareholders.
Martin Gilbert
The Board has proposed a final dividend per share, subject to
approval by shareholders, of 15.0p, an increase of 7% making Martin Gilbert
a full year payment of 22.12p. The final dividend will be paid on Chairman
19 August 2011 to shareholders on the register at 15 July 2011. We 11 May 2011
recognise that dividend growth is a key component of the investment
decision for many shareholders. We remain committed to delivering
Operating profit referred to throughout this report refers to operating profit before amortisation
sustained real growth in dividends, despite challenges as a result of charges, ineffectiveness on financial derivatives, non-recurring items, loss on disposal of
properties and discontinued operations. EBITDA is adjusted operating profit plus depreciation.
the current economic environment. This is a priority for the Group
and is adequately supported by continued strong cash flows.
This was a year of significant change within the Group. Tim O’Toole
became Chief Executive on 1 November 2010, as Sir Moir Lockhead
handed over his executive responsibilities ahead of his retirement
on 31 March 2011. During his long and successful career Sir Moir
made an outstanding contribution to the Group and to the transport
industry as a whole. On behalf of the Board, I would like to recognise
the pivotal role he played in transforming the Group into one of the
world’s leading transport operators.
2 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 3
Our business
FirstGroup plc is the leading A portfolio of businesses Diverse markets Key risks and opportunities Key stakeholders
transport operator in the UK and Our portfolio of businesses is diversified Our businesses in the UK and North America There are a number of potential risks and geographic spread competing with several We work with a range of bodies in each of
by geography and customer base and operate in local markets with different uncertainties that could, without effective large companies as well as a substantial our markets. Understanding and managing w
North America with revenues of structured into five main operating divisions: commercial and regulatory features. Pages management, impact Group performance. number of smaller, locally owned or our stakeholders’ expectations is pivotal vie
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over £6 billion a year. We employ First Student 8 to 17 provide an overview of the markets Full details of these, together with the government owned operators. Our Greyhound to our success and therefore continual al r
approximately 125,000 staff in which we operate, their scale and mitigating actions, are set out in detail in coach operations face competition from a engagement is vital. ci
First Transit n
tAhmroeurgichao aunt dth tera UnKsp aonrdt oNvoerrt h G UKre yBhuosund cerahailca mhra aocrntkeeer.it ssOt iicunsr t phtooegs UeittiKoh nea rni nwd t itihnhe t ohlouecr saptl oubsduietsino atn n idn tThhee Rcehpaollertn ogfin tgh ee cDoirneocmtoircs .environment of nAInum UmeKbri ecBrau oasf s ao wnthdee lUlr acKso Rafracoihml, oo bpuuer drmagtaeoitnr sa c iirnoli nmNeposer. tt hit or S oE mmep olofy oeuers key stakeholder groups are: and fina
2.5 billion passengers a year. T h UisK b Raalailn.ced portfolio provides a mix of tmwraiatnhrsk upentosrri vtinaa tltiloehnde, UktrnSao nawsnlietd da Cgnaden ainandtedar cepixtrpyo evcriodieaencsch ue s rtpFheoaacrste s eneextcna oygmeneaporr lmeds ,eih ctmah aseac ndlteidevv imetayln o ohdnfa scestocr oanotntner aodbcm ottht ihcbe u oaimsucirntp iveaistcyst es. iccsoo tamhceph ecetasitr o.a rTn otdo a bo uluedrs gsUeeKtr aeRixraltiienl nbetsu, saloinrneeg sa sdlseioss t.aa W ncee G C Suuopsvteporlymn mcehresanint and local authorities Operating
of the many different commercial and believe that the increasing cost of motoring,
contract-backed and passenger revenues. affects the number of bus and rail journeys
regulatory frameworks in place and also principally rising fuel costs, is an opportunity Investors
During these challenging economic times taken by passengers in the UK and North
this mix of operations has provided puts us at the forefront in developing new America and also creates budgetary to attract more passengers to our services. Community.
and future opportunities.
strength and resilience against a changing pressure for school boards and transit For further details on how the Group assesses
trading backdrop. authorities in North America. and manages the key risks and uncertainties
please refer to the Corporate Governance
All of our businesses compete in the areas
section of the report on page 40.
of pricing, quality and service and face
competition from a number of sources. In
North America, our businesses cover a wide

First Student Revenue £6,429.2m £6.4 Revenue for
the year
The largest provider of student transportation in North America with a fleet of approximately 57,000 yellow school buses, First Student 25% bn
carrying some 6 million students every day across the US and Canada. First Transit 12%
Greyhound 10%
UK Bus 18%
UK Rail 35%
First Transit
One of the largest private sector providers of transit management and contracting in North America. First Services,
a division of First Transit, is the largest private sector provider of vehicle maintenance and ancillary support services
in the US.
,
Greyhound 125 000
Employees 125,000 Number of
The only national provider of scheduled intercity coach services in the US and Canada. Greyhound provides scheduled staff we
First Student 50%
passenger services to some 3,800 destinations carrying approximately 20 million passengers a year. employ
First Transit 15%
in the UK
Greyhound 7%
UK Bus 18% and North
UK Rail 10% America
UK Bus
The Group is Britain’s largest bus operator running more than one in five of all local bus services. A fleet of some 8,000 buses
carries approximately 2.5 million passengers a day in more than 40 major towns and cities.
UK Rail
2.5
The Group operates approximately one quarter of the UK passenger rail network, with a balanced portfolio of intercity, Operating profit Passengers
commuter and regional services, carrying over 290 million passengers a year. £457.4m bn per year
First Student 27%
First Transit 12%
Greyhound 8%
In mainland Europe we operate some 150 buses in south west Germany and, with our partner DSB, we operate passenger rail services on UK Bus 31%
routes in and between Denmark and Sweden. UK Rail 22%
4 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 5
Our strategy Key performance indicators
Our strategy is to provide The strength of the Group lies is not dependent on any one Revenue (£m) Description Performance
safe, reliable, innovative and in the breadth and diversity of market and also offsetting a
6,131.8 6,261.9 6,429.2 Revenue is principally from train passenger Revenue increased by 2.7% including w
sustainable transport delivering its operations. During the year weaker performance in one area services, road passenger transport, and favourable foreign exchange movements of vie
hseigrhvi cqeusa lfiotyr apnadss aetntrgaecrtsiv aen d dcoiffnetrineunet dp atort sm oofv oeu trh brouusginhe sthse wotihthe rs ptraorntsg eorf ptheerf opromrtafonlcioe.s in 3,673.5 4,659.3 cseerrvtaicine sm ina nthage eUmKe annt da nNdo mrtha inAtmenearinccae. £at9 c8o.0nmst,a rnetp creusrreenntciniegs a.n increase of 1.1% cial re
n
a
long-term value for our economic cycle at a different fin
d
shareholders. pace, ensuring that the Group n
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2007 2008 2009 2010 2011 atin
Adjusted operating profit (£m) per
O
494.3
449.6 457.4 Adjusted operating profit is intended to Adjusted operating profit increased by 1.7%
356.9 highlight the recurring results of the Group to £457.4m.
before amortisation charges, ineffectiveness
257.1
on financial derivatives, non-recurring
items, loss on disposal of properties and
discontinued operations.
2007 2008 2009 2010 2011
Priorities
Adjusted EBITDA (£m)
767.5 763.9 778.2
Adjusted EBITDA is defined as adjusted Adjusted EBITDA increased by 1.9%
556.5 operating profit plus depreciation. to £778.2m and EBITDA margin was
maintained at over 12%.
396.2
Throughout the year we retained a clear focus on achieving our priorities.
2007 2008 2009 2010 2011
Delivering high quality services for customers Increasing cash generation
Customers want high quality services that are reliable and punctual. We retained a strong focus on increasing net cash within the Group Adjusted basic EPS (pence)
Across the Group we constantly review operational performance and were pleased to exceed our target for the year. This performance 48.1
Adjusted basic EPS is calculated by dividing Adjusted basic EPS was 41.2p (2010: 38.9p)
to ensure we deliver the services that meet the needs of our existing was driven by a sustained focus and discipline across our operations 40.4 38.9 41.2
the adjusted profit attributable to equity representing an increase of 5.9%.
passengers and attract new customers to public transport. Overall including good progress made in implementing initiatives to deliver 33.3
shareholders by the weighted average
our performance and customer satisfaction showed a steady improvements in working capital. The highly cash generative nature
number of ordinary shares.
or improving trend during the year. Our employees deliver an of the Group enables us to increase capital expenditure and
exceptional service to our customers every day and this year supports the Board’s policy to increase dividends by at least 7%
we embarked on our first global staff survey. We recognise that per annum as well as deliver our net debt reduction programme.
employee engagement is vital in order to continue to improve and
2007 2008 2009 2010 2011
develop the Group. The insights and front line experiences of our
staff will create real and lasting change and help to position our Reduction in Lost Time Injuries
business for the future.
11
% Lost Time Injuries refer to work-related injuries or illness that result in one of our employees
being unable to work on a subsequent scheduled work day or shift. We achieved an 11%
Managing our networks Strengthening our financial foundation
reduction in Lost Time Injuries across the Group.
We continued to maximise the flexibility that exists within our Net debt reduction is a key priority for the Group. During the year
networks to ensure that we respond quickly to any changing we made good progress, despite the subdued growth environment,
demand. Where we saw tough trading conditions in the towns and in reducing leverage. We achieved our target ratio of 2.5 times net
cities in which we operate we continued to manage supply through debt to EBITDA at 31 March 2011 (from 3.0 times at 31 March
targeted mileage reduction and frequency adjustments. These 2010) and we continue to target further improvement in 2011/12.
actions, coupled with rigorous cost control, have been appropriate We also strengthened our financial position during the year with the
for the environment, however we retain the capability to restore ongoing proactive management of debt. In December, $1.4bn of North American contract businesses
capacity and service levels as economic growth recovers and five year committed bank facilities were signed to replace revolving c.90
% In our North American contract businesses we retained approximately 90% of the fleet
demand returns. As we look to the future, our focus is to retain bank facilities due to mature in 2012. Achieving attractive pricing,
that came up for tender during the year. This reflects a continued strong performance in
our strong cost discipline while renewing our focus on growth terms and conditions we were pleased by the continued strong
First Transit and a weaker performance in First Student as a result of the particularly high
and promoting modal shift. support for the Group.
contract churn during the year and continued constraints on school board budgets.
6 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 7
Market overview: First Student
We are the largest The market Our market share Competitors Our customers Market features
provider of student School buses provide transportation to We are the largest private sector operator Only a third of school districts have outsourced School districts provide transportation Contracted revenue
transportation in mCaillnioandsa .o Tf shteurdee anrtes oavcerro 1s5s ,t0h0e0 U sSc haonodl othf rseceh toimole bsu bsiegsg einr tNhoarnt ht hAem neerxict ala –rg oevset r tshcehiro oolp beurasteiosn –s t–o athpep rporxivimataet eselyc 1to8r3. ,000 fdoert estrumdineendts adt eSpteanted ilnevge ol na nvda rcyoinngtr carcittes r ia Typically high levels of contract retention view
North America with a fleet of districts in North America responsible for competitor The private outsourced sector market is are typically awarded for three to five years. Safety and security al re
approximately 57,000 school providing over 530,000 school buses each We operate approximately 57,000 school highly fragmented with only 11 operators School districts receive funding for their Trusted operator in the local community nci
buses, carrying some 6 million day. In total, the North American market is buses – with an average fleet age of running more than 1,000 buses. Our largest activities including transportation from State Investment in innovation and technology. fina
estimated to be worth around $22 billion 6.9 years competitors are National Express, Student and local sources, including tax receipts. d
students every day across the per annum. Transportation and Atlantic Express. The 11 Changes in market during 2010/11 an
US and Canada. We operate in approximately 40 States largest contractors operate approximately Labour Continued pressure on school board ng
in the US and eight Provinces and one 100,000 buses – some 20% of the total The majority of First Student’s employees budgets as a result of economic weakness ati
T Weerr ihtoarvye inm Coraen tahdaan 1,500 different mThaer kneetx ot r4 505 l%ar goef stht ec oonuttrsaocutorcres do pmearrakteet . adruer idngriv tehres swchhoo owl oyreka rp. aOrtv-etirm tew oan-tdh irodnsly o f Reduction in routes operated and school Oper
and non-school charter activity as a result
contracts in approximately 600 locations a further 15,000 buses and the remaining First Student’s employees are represented
of funding pressure.
We provide charter hire services for school outsourced contracts are operated by more by trade unions. The majority of our
and non-school activities than 4,000 small companies, often termed employees are represented by the International
‘Mom and Pop’ operators. Brotherhood of Teamsters but many
Our scale enables us to develop value
employees have chosen to be represented
added services for existing and potential
by other national and local unions.
customers to provide greater on demand
information and operating efficiencies.
Where we operate Revenue Total market $22bn 6 Students
per day
£1,594.4m FirstGroup 11% m
ALASKA Other outsourced 24%
In-house 65%
Seattle
1,500
Operating profit Share of outsourced Number of
Chicago Detroit £128.3m market contracts
FirstGroup 31%
New York
Washington National Express 9%
San Francisco Atlantic Express 3%
Student Transportation 4%
Los Angeles Cincinnati Illinois Central 1%
Cook Illinois 1%
Petermann 2%
Other 49%
Miami
57,000
First Student Employees First Student Number of
62,000 fleet footprint school buses
California 7%
Illinois 8%
Ontario 12%
New England 15%
NY/NJ/PA 21%
All others 37%
Find out more at www.firstgroup.com/north_america
Unless otherwise stated information used in market overviews is based on internal company research
8 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 9
Market overview: First Transit
First Transit is one of The market Our market share: Transit Competitors Our customers Labour
the largest private sector The transit contracting and management We operate in approximately 230 locations The transit market is fragmented with the First Transit manages, operates, maintains The majority of First Transit’s employees
services market includes fixed route bus in 37 US States, Puerto Rico, US Virgin three largest private sector companies and organises transportation services under are represented by trade unions. The w
providers of transit services, paratransit bus services, airport, Islands and four Canadian Provinces operating less than 35% of the total contract to customers including transit proportion of unionised staff is higher in vie
e
management and contracting, university and private shuttle services. We have approximately 250 contracts outsourced market. First Transit’s largest authorities, Departments of Transportation, heavy transit – our fixed route and paratransit al r
managing public transport The North American transit market is competitors are MV Transportation and Federal, State and local agencies, as well contracts – than in other segments of the ci
We operate and manage 11,600 buses n
sayusthteomritsie osn. Ibt eish oanlf eo of cf itthye t ransit ewosuittthism oaauptrepcdreo dtxo ism beaect tewolryo. r3th0 %$2 i1n tbhilelio pnr ipvaetre a nnum i On uthr es tlriagthetg tyra isn stoit mdealirvkeert further growth VTehoe lioau Ttrsaonusrdceedv Tflreaents mpoarintatetinoann. ce market aDospis eparrbaivitliaintiteges fii nxAsectditt urretoiqouunteisr e.t rsTa hnpesu ibAt ltmioc eapruricothavnoidsrei tw ieisth bemuspinloeysese. sL easres rtehparne s1e0n%te odf bFyir sat uSneirovnic. es and fina
lsmaerargvneiacsget esps ri noc vatihdlle ec rUesnS ot rfae snshd, u attlsleo b us Wtwoi etbh ee a swptipmorraothtxe i$m t2ha.e9te vblyei lhl3ioi8cn%le p mceora naintnrteanncutamend cin eo tumott aatorl k et a Wirep oarret sohnuet tolef stheer vlaicregse sint pthreo vUidSe.r s of iVmtshe eahhrriigekce hlaetly rsbe c Seaohe mnirnvupdimce Petbisetei nvirses o.kt hfeW se ame tn headirsl ld Rtai mlynaddarge tmere, stehhtdo ainiwut mtFehvir ees rt cefoolirgm tibhprlelee ecm itteoizn efitnvaesry .y Cpeaaorrnast.tr raacntssi ta sree rtvyipciecsa lfloy r M C Hariogknhet rtlae fcveeteal dtou fr recevusesntoumeer service and Operating
private sector providers. Our market share: Services sized companies that represent nearly a First Vehicle Services provides fleet vehicle retention
paratransit operations and We operate in over 90 locations in 24
quarter of the outsourced market. maintenance services under contract to Typically low capital investment.
other light transit activities. US States and four international locations
private and public sector clients including
We have approximately 90 contracts the Federal Government, cities and Fire Changes in market during 2010/11
First Services is the largest
We maintain over 43,000 vehicles and Police Departments. Pressure on public spending budgets
private sector provider of vehicle as a result of economic weakness.
We provide fleet maintenance services First Support Services provides operations
maintenance and ancillary for public and private sector customers and maintenance services, including facilities
support services in the US. We provide support services including management and warehousing and supply
logistics support and facilities management to agencies of Federal, State and local
to public and private sector clients including governments as well as to businesses in the
the US Navy and Air Force. private sector.
1.2
Where we operate Revenue Approximate revenue $ Revenue for
£771.5m by type bn the year
Fixed route 33%
Paratransit 26%
Shuttle 14%
Transit management 6%
Vehicle Services 11%
Support Services 10%
Seattle
4
Operating profit Total market $21bn % Share of
total market
£57.2m Outsourced 30%
Chicago Detroit In-house 70%
New York
Washington
San Francisco
Cincinnati
Los Angeles
Miami
300
First Transit Employees Share of outsourced Passengers
Puerto Rico 19,000 market m per year
FirstGroup 14%
Other companies 86%
Find out more at www.firstgroup.com/north_america
10 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 11
Market overview: Greyhound
Greyhound is the only Greyhound has three operating subsidiaries The market Our market share Our customers Market features
national provider of in the United States: Valley Transit Company, The majority of revenue is generated from We are the only national provider of Greyhound serves a diverse, value-oriented Passenger revenues
scheduled intercity sUeSrAvi,n sge trhvein Tge sxoaust-hMeernxi cCoa lbifoorrdniear ;a Cndru Acerirzoo na pparosvsiednegs epra scekravgicee se xbpurte Gssr esyehroviucneds ,a clshoa rter sscehrveicdeusle idn itnhtee rUciSty a cnoda Ccha ntraadnasportation cpuasstsoemngeer rb saesrev ibcye so fwfeitrhin agn s ucnhreivdaullleedd t Hoi gmhalyt cflhe xsiebrlev icoepse rtaot icnhga mngoidnge l p–a asbsielintyg er eview
coach transportation services into Mexico; and Americanos USA, serving services and, in many terminals, food We carry approximately 20 million network and route coverage. Our customers’ demand, particularly in the US al r
in North America. Greyhound points in Mexico from Texas and New Mexico. services. Greyhound has partnerships with passengers per annum primary journey purpose is to visit friends Value for money nci
pserorvviicdeess tsoc 3h,e8d0u0l edde sptainsasteionngse r Bkeoylt Bciutys ,p aa ijro dinets vteinnattuioren,s o inp ethraet enso rbteht weaesetn o f atch onemu UmpSleb. meTrhe oenfst aienr dyb euspsee rcvnoidcmeen pttoa b nGuierses lyipnhreoosuv niaddcer’ so ss v Weeh ihcalevse. aT hflee eatv oefr aagpep arogxeim oaf ttehley a2c,1t0iv0e acwunitsdht ofcamamseihlrys .b bTurota uidngicthirote na‘waslailnyl,kg Gluy rpce’uy thsictookuemntsed,r sp raimrea rily a Mnadin f rrieeansdosn. for travel is to see family and fina
tcharroryuignhgo aupt pthroex UimSa atenldy 2C0a nmaidlliao n tEthhxeep UsretSrse.s nT, gchtoihsm oybef atinhri enw gGe f releaayuthnuocreuhsne ddo fb GBraroenlytdBh,o uwusi ntwhd i th essymxsisattelilnmegr. tsIoncw hanedsdd uiintlie oGsn r,ae Anymhdo tliurnankkd tp’osa mnsasatenionyng oaeflr strho ueus tee Coflemept iest 9it.o4 rysears. bGureyyinhgo tuicnkde.ctso min .advance through C h Paanssgeensg einr rmevaernkueet adfufercintegd 2b0y1 w0/e1a1k perating
passengers annually. non-stop services from Chicago to several Greyhound to make connections to cities not Intercity coach transportation competes with BoltBus and our new Greyhound Express economy and unemployment O
cities in the Midwest. many other modes of mid to long distance brand attract a different customer
served by rail on Amtrak Thruway service, by Network changes in response to reduced
travel, including a number of other coach demographic with yield managed fares,
purchasing a ticket for the bus connection passenger demand
operators as well as budget airlines. The online reservation and a range of features
from Amtrak in conjunction with the purchase
north east of the US is the most dense including free wireless internet on all buses. Start of programme to refurbish fleet to
of their rail ticket.
travel corridor in the country and is a highly improve service quality and performance
competitive intercity coach market. In 2008 Labour Launch of Greyhound Express to markets
Greyhound launched BoltBus, a low cost, The majority of our Greyhound employees in the Midwest
premium, curbside operation in this market. are represented by a trade union, principally
Expansion of BoltBus to create a new hub
the Amalgamated Transit Union. A number
in New Jersey providing services between
of other unions also represent employees.
Newark, Washington and Baltimore
Further agreements with Canadian
Provinces to reduce mileage or receive
financial support to run certain, low-utilised
services in specific areas.
20
Where we operate Revenue Approximate revenue Passengers
£634.6m by type m per year
Passenger 82%
Package Express 9%
Food Service 2%
Charter 2%
Other 5%
3,800
Operating profit Approximate revenue Number of
£40.2m USA vs Canada destinations
USA 75%
Canada 25%
2,100
Employees Approximate distribution Number of
8,000 of sales and passengers vehicles
by mileage band
1-200 miles 46%
Greyhound network
in Canada 201-450 miles 32%
Greyhound network 451-1000 miles 15%
in the US 1001+ miles 7%
Affiliated carriers in Mexico
Find out more at www.greyhound.com or www.greyhound.ca
12 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 13
Market overview: UK Bus
We are the largest bus The majority of our operations are in urban The market London Competitors Market features
operator in the UK areas where the bus is the most effective Outside London Bus services in London are operated Our main competition in UK Bus is the High customer satisfaction
with a fleet of 8,000 maree awnos rokfin tga cwkiltinhg lo tcraaflfi acu cthoonrgiteiessti oann.d W e LLooncadlo bnu, sw seererv diceerse ginu ltahtee dU Kin, tohuet smidide- 1980s. oCno nbterahcatlfs oafr Ter ganrosspso crto fsotr aLnodn dtyopnic (aTlflLy ).fi ve cdaerr.e Ignu aladtdeidti oann,d t hvee rUy Kc oBmusp emtiativrkee. tI nis t otal, Investment in new vehicles view
bapupserosx aimnda tae lmy 2ar3k%et. sWhea rcea orrfy orethliaebr lset asekervhicoeldse frosr toou pr rcouvsidtoe mpuenrsc taunadl awned Tcohme mmaerrkceiatl ibs uhsig ohplye rcaotmorps e–t iltaivreg eb eatnwde semn all ytiemaertsa ibnl elesn agnthd. vTefLh icslpeesc, itfiaekse fsa trhees, rreovuetneuse, tUhKe raen adr ein s aolml me a1r,k2e5t0s ibnu ws hoipche rwateo rosp ienr tahtee i Innfnoorvmaatitoionn i.n ticketing, marketing and cial re
n
seovemrye d2a.5y .million passengers cpUoaKnr tptninreourvseih dtioipn sgd. e rWevegeluo alpals ra oinn otdep rpecrrioatymt eco oGtear eceyhfh fesoecurtnivvdiec es –Rp aeayvniendng bu peea tpwsrseineecnnigp teahrlesly b acunosdm ainensdd i drtehirceetc lypt lrfyirv ofarmotem c afar.r e rwsiesitkrhv aican ebd qo punaauylsist y ao.npde rpaetonraslt fyo rre rguinmnein lgin kseedrv ticoe s wnhauevm efab eceietrh coeofr imnetnpeterentrieatidotio ntn.h aDel umtrraiannrgks epthto eor rty soeipagren, riafiac toarnst ly C h Loawngere ps aisns menagrekre rte vdeunruine gg r2o0w1t0h/ 1a1s a and fina
on routes between London and the south reimbursement by local authorities for increased their presence. Some multi- result of economic weakness and higher ng
coast, between Cardiff and Swansea concessionary passengers. Bus operators Our market share regional operators have increased market unemployment ati
and, most recently, between London take revenue and cost risk. Bus markets are We are the UK’s largest bus operator share through acquisition and a number of Mileage reduced in response to lower per
and Glasgow. local and are affected by local issues from We operate one in five of all local bus local bus operators have both entered and passenger demand O
Local bus services in the UK operate demographics to politics to topography. services left the market. Continuation of the Competition
Local bus services operate on a flexible Commission’s market study into local
on two very different models. Outside Our operations are diversified by
model with bus operators setting fares, Our customers bus services in Great Britain
London the market is deregulated and geography – 40 major towns and cities
frequencies and routes on a commercial Our UK Bus customers are diversified by
within London the market is regulated – and by customer and journey purpose DfT consultation on reimbursement for
basis to meet customer demand and also journey purpose with significant proportions
and competitively tendered. concessionary bus travel and changes
providing ‘socially necessary’ local bus Average fleet age is 8.4 years using bus services for commuting – to work,
to regulations from 1 April 2011
services under contract to local authorities. We also operate Greyhound intercity school, college or university – for food and
Comprehensive Spending Review
coach services in the UK. non-food shopping and for leisure.
announced a 20% reduction in Bus
Service Operators’ Grant from April 2012
Labour
and set out reductions in funding for local
Around 90% of UK Bus employees are
authorities from April 2011 leading to
members of a union, predominately Unite
pressure on budgets for socially necessary
but with significant representation by other
bus services.
unions including the RMT and Unison.
24
Where we operate Revenue Share of deregulated % Share of deregulated
£1,137.5m market outside London market
UK Bus operations FirstGroup 24%
Stagecoach 20%
DB Arriva 12%
London depots National Express 7%
Go-Ahead 5%
Northumberland Park Others 32%
Aberdeen
Uxbridge
Willesden Junction Source: Research note Liberum Capital December 2010
Alperton Hackney Oanthde crosm inpcalundieess oinwdneepde nbdy eonvte orspeearsa otopres,r a1t1o lroscal authority owned bus operators
Greenford WPaersktbourne Dagenham
Glasgow Edinburgh Hayes
2.5
Operating profit Share of Passengers per day
£148.8m London market m
FirstGroup 12%
Go-Ahead 21.5%
DB Arriva 21%
York Stagecoach 15%
Bradford Leeds ComfortDelGro 12.5%
Manchester Halifax
Sheffield RATP 9.5%
Chester
Abellio 5.5%
Stoke-on-Trent
Other 3%
Norwich
Birmingham Leicester Source: TfL website
Worcester Northampton Ipswich ,
Swansea Chelmsford 8 000
Cardiff Bristol Slough Employees UK Bus revenue Number of buses
Bath
BarnstaEpxleeter Southampton Portsmouth 23,000 CLoonndcoens stieonndaeryrs f a1r8e%s 21%
Weymouth Non-London tenders 10%
Plymouth Passenger 51%
Penzance
Find out more at www.firstgroup.com/ukbus
14 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 15
Market overview: UK Rail
Our UK Rail division The market increases (or subsidy decreases) over the UK rail franchises and rail operators from Market features Publication of ‘Reforming Rail Franchising:
operates passenger Privatised in the mid-1990s it is a duration of the franchise and in some other countries, principally from within the Passenger journeys at historic highs Government Response to Consultation
services in the UK. coopmerpateotirtsiv feo re nthveir oanwmaredn to bf eptawseseenn gtrear nrsapil ort fisra cnocnhsistaens tt.he level of premium or subsidy E20u1ro1p feoaunr bUidndioenr.s F porre e-qxaumalipfieled, ifno rM thaerc h Increasing customer satisfaction &w iPll obleic lyo Sngtaetre; mspeenct’i fi–c fauttiounres fwrailnl cbhei sleesss view
We have a strong balanced franchises (contracts with the Department Operators are responsible for the day to InterCity West Coast franchise competition: Operational performance improving prescriptive and there will be greater al re
portfolio of intercity, regional for Transport – and other franchising two from the UK, one from France and one Investment in passenger benefits. incentives for operators to act efficiently ci
day management of train services. Many n
aPoGnfar edFsas irctes onWt mgCeemasrpt ueriattreanilrl , f CfrFraaoinrnnscctnh hSeisiccseteo,s stF R.c iraosinlt sist aaRpToounvaeettdsvahrs e lob e£nfrern6uiattg eiwnebe csceirll hsoei–oi nms onf eor re pdarfs rie tl op hdrsm aeiaers enr psfvcnrreiatoculnnyvemg cisfse.rh i oaorTis mnnrriaend oivgf naoef ratnosehueup etpreehrvas roimac yartieinoortseigdre)s es .s . epccoolaenmsmstrmeeanncegttrs,ce oiorastflh tjaeuhrrdee fg esmmeaatreuvnnirdcet aesot fepa odrroep av elseidr fapett adotor rtt so t.oh fe t he fTcctrooaho rmaem blmp eutehsatt esiionte iNn orc neseo toxmfhrtmeoeprmneelat t ,pnio tlaodothsrsn se.gt eor nd rragiasieilt l asrs enflercorvvewiic cscee otssha aecisnrh edt h a,is en d C hoaa Pnnafa ddvnso sgaeleuexdnmosdgg ieeiteni orgn nrmroeoauvawl essrt nekhfaure,cv etmit cogdaerrursoskr wieiinnnttc ihgnsl uog a2dm si0in nea1igt 0ifra ree/at1sicvn1uoeclnsth oi smesic apA S Anatnnadsgnrs oltiien auonv nrfeg ecIsneferttra mesinnr ewC ctnhhaittieyn so tiiWnfm geep lecsrotco vtCmreiofipmcaeasetittnt iioatosnnn dso fG trheea ter perating and fina
and First TransPennine Express share revenue risk with franchising Our market share budget airlines. recovery and employment growth, Great Western Main Line to Didcot, O
and one open access operator, authorities – this is referred to as revenue We are the UK’s largest rail operator particularly in central London Newbury, Oxford, Bristol and Cardiff and
First Hull Trains. We also operate support or revenue share – but bear cost Our operations are diversified by sector Our customers Comprehensive Spending Review also key routes in north west England and
risk. Net cost contracts of variable length – and by customer and journey purpose Our customers are diversified by journey confirms increase to cap on regulated go ahead for InterCity Express Programme
the London Tramlink network purpose. For our franchises in London and to replace High Speed Trains
often seven years plus possible three year We operate First Hull Trains, an open fares to RPI+3% for three years from
on behalf of Transport for extension depending on a range of criteria, access passenger rail service the South East of England, the majority of January 2012, and Government funding Government starts consultation on High
our passengers are commuters to and from
London carrying some 28 million often related to performance targets. Through our joint venture with Danish London. First Great Western also has a for key infrastructure projects including Speed Two proposals.
passengers annually. We are Rail markets vary but are often grouped into State Railways we operate passenger large proportion of long distance and the Thameslink Programme and Crossrail
the UK’s largest rail operator three sectors – London and South East rail services in and between Denmark leisure travellers. First ScotRail and First Publication of the interim report of the
commuter services, regional and long and Sweden. TransPennine Express also carry a large McNulty review of value for money in the
carrying over 290 million
distance. Some passenger rail franchises number of commuters into the major towns rail industry
passengers a year. pay a premium to the franchising authority. Competitors and cities on their networks but also serve
Some receive a subsidy from the franchising Competition for new rail franchises is a significant leisure market.
authority. In some franchises the premium intense. We bid against operators of current
Four
Where we operate Revenue Share of UK rail market Passenger rail
franchises
£2,269.8m FirstGroup 24%
Stagecoach 21%
First Capital Connect
Govia 19%
First Great Western National Express 9%
First Hull Trains DB Arriva 9%
First ScotRail DfT 9%
First TransPennine Express Virgin Rail 6%
Serco NedRail 3%
MTR and other 1%
Figures do not add up to 100% due to rounding
24
Operating profit UK Rail franchises PPM MAA* % Market share
£108.7m
94
92
90
A
A
M
M 88
P
P
86
84
82 290
Employees Passengers
2007 2008 2009 2010 2011 per year
13,000 m
First Capital Connect First ScotRail
First Great Western First TransPennine Express
*Public Performance Measure (PPM) on a Moving Annual Average (MAA) basis
Find out more at www.firstgroup.com/uktrain
16 FirstGroup Annual Report and Accounts 2011 FirstGroup Annual Report and Accounts 2011 17
1.0
0.8