Trading Statement

Thursday 29 March 2012

                                FIRSTGROUP PLC                                 

                           PRE-CLOSE TRADING UPDATE                            

FirstGroup plc ("the Group") reports the following update on trading for its
financial year ending 31 March 2012 ("the year" or "the period") ahead of its
preliminary results to be announced on 23 May 2012.

Overall trading

The Group provided an update on trading in respect of the third quarter of its
financial year on 12 January 2012. Since then overall trading for the Group has
been in line with management's expectations and we remain on course to achieve
overall earnings and cash targets for the year.

Our portfolio continues to provide diversity with separate businesses moving at
different stages through the economic cycle. Our three North American
businesses continue to demonstrate progress and the US macro economic outlook
is showing positive signs. In UK Rail, against a background of robust revenue
growth we are now at an inflection point in the Government's re-franchising
programme. Lower economic activity, particularly in Scotland and the North of
England, is creating pressure on the performance of our UK Bus business.

During the year we have continued to drive cash generation to support capital
investment, debt reduction and dividend growth of 7%, in line with our current
commitment. As previously indicated, we expect cash generation for the year to
be within the range of £100m to £115m and a net debt to EBITDA ratio of 2.5x at
31 March 2012.

First Student

Our Student business is now well set on the path to recovery and we are pleased
with the good progress made in executing our plan to address performance and
strengthen the operating model. Trading has developed in line with our
expectations with US Dollar revenues expected to be reduced by 1.4% on a
like-for-like basis while operating margin for the second half of this current
financial year is expected to be slightly ahead of the same period last year.

First Transit

Our Transit business delivered a steady performance with US Dollar revenues
expected to grow by 1.5% on a like-for-like basis. As we continue to renew
contracts and win new business by leveraging our strong reputation for delivery
and efficiency, we see further opportunities to promote and encourage the
conversion of further contracts to the outsourced market.


Greyhound
Greyhound continues to perform well from a transformed operating model with
like-for-like revenue expected to increase by 4.2% during the period. In the US
we are delivering an improved operating margin and, as a result of our actions
to reduce uneconomic routes, our Canadian business is on track to deliver our
profit recovery plan. We are pleased with the success of Greyhound Express
which continues to perform strongly. Over 1.8 million customers have now
experienced the service and our recent expansion will create the largest
network of more than 600 city pairs in North America.

UK Bus

Like-for-like passenger revenue is expected to increase by 1.5% during the
period. As previously indicated, the economic environment is presenting
challenging trading conditions and performance during the year reflects the
growing North-South divide with considerably lower growth rates emerging in
Scotland and the North of England, where a significant portion of our urban
operations are concentrated and approximately 60% of our UK Bus passenger
revenue is generated. As part of our stated strategy to pursue selective asset
and business disposals as we position our UK Bus division for the longer term,
we announced in March the sale of our Northumberland Park depot in North East
London and our North Devon operations.

UK Rail
During the year our rail division delivered a strong performance with
like-for-like passenger revenue expected to increase by 8.3%. As previously
indicated, 2012/13 will be a transition year for our rail division as two of
our franchises approach the end of their current term and First TransPennine
Express operates in the 3-year extension period with margins closer to the
industry average. We remain confident that we are well placed to build on our
position in the UK rail market and develop opportunities from the
re-franchising programme.

Following the announcement by the DfT today, we are delighted to have
successfully pre-qualified for a further three rail franchises - Great Western,
Thameslink and Essex Thameside - and look forward to submitting bids in due
course. This follows the Group's pre-qualification for the Intercity West Coast
franchise in March last year.

Outlook

Looking ahead 2012/13 will be a year of transition for the Group. We remain
encouraged by continued progress in our North American operations and believe
that improving trends in the US economy will be positive for our businesses.
The recovery plan is now embedded in First Student and we believe will continue
to deliver in line with our expectations. Transit continues to generate good
returns from low capital investment across a range of business segments. The
actions we have taken to transform Greyhound and deliver increased growth and
operating leverage are now clearly delivering results.

In UK rail we have already pre-qualified for four franchises and are well
placed to progress these and further opportunities from the Government's
re-franchising programme.

In UK Bus however, given the further deterioration of economic conditions
particularly in our urban operations in Scotland and the North of England, we
do not expect revenue growth and cost efficiencies to be sufficient to offset
the impact of reduced government subsidies and funding to the industry and
increased fuel costs, as a consequence we currently expect UK Bus operating
margin to be approximately 8% in 2012/13. As previously indicated, we believe
that a combination of targeted investment and the changed approach to the
management of our bus operations will yield returns in line with industry
averages. There is considerable scope to focus our operations on those areas
with the greatest potential for growth and returns. Therefore, in addition to
the programme of selective asset and business disposals already commenced in
the period, we are accelerating a comprehensive plan to significantly
reposition the portfolio in the coming year. The new management team in UK Bus
has a clear direction and we are confident that the actions we are taking will
create a more robust and profitable business that is equipped to generate
improved returns and sustainable growth.

The combined effect of the trading outlook in the UK together with the
management actions to reposition our UK Bus portfolio is expected to result in
the Group's net cash flow being broadly neutral in 2012/13.

The Group has market leading positions and, while addressing the impact of the
current weak economic environment and trading conditions in certain markets in
which we operate, we are taking action that will strengthen our businesses for
the future. Therefore, the Board is committed to dividend growth of 7% in line
with our current commitment and is confident that the Group has good prospects
to deliver long-term value for shareholders in a sector which is a key enabler
of economic growth.

  A conference call for analysts and investors will be held at 9:00am today.   

Please call [phone] in advance of the call to register and to receive 
                               dial up details.                                

Contacts FirstGroup:

Tim O'Toole, Chief Executive

Nick Chevis, Acting Finance Director

Rachael Borthwick, Group Corporate Communications Director, Tel: +44 (0) 20
7291 0508 or 0512

Brunswick Group:

Mike Harrison/Craig Breheny, Tel: + [phone]


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