Trading Statement

FIRSTGROUP PLC

THIRD QUARTER 2016/17 TRADING UPDATE

FirstGroup plc (the 'Group'), a leading transport operator in the UK and North America, today reports the following update on trading for the period to the end of December 2016.

Summary:

• Trend of overall trading and expectations for the full year unchanged

• Reported Group revenue increased by 12.8% in the third quarter, benefiting from favourable currency translation. Group revenue in constant currency was flat, with growth in North America offset by previously announced rail franchise changes and First Bus trading

Increase/(decrease) vs comparable period, in constant currency	Q3 2016/17	YTD 2016/17
First Student revenue	+1.0%	+0.5%
First Transit revenue	+5.5%	+4.0%
Greyhound like-for-like revenue	+1.2%	(2.5)%
First Bus like-for-like passenger revenue	(0.6)%	(1.1)%
First Rail like-for-like passenger revenue	+1.1%	+0.8%

Commenting on today's announcement, FirstGroup Chief Executive Tim O'Toole said:

"Our overall trading performance continues to support our expectation of good progress for the current year. Our substantial North American operations are delivering encouraging performances and are benefiting from currency tailwinds, but we continue to experience tough trading conditions for our First Bus and First Rail operations in what remains an uncertain UK macroeconomic environment. We remain focused on disciplined execution to deliver significantly increased cash generation for the full year."

Divisional update on the third quarter:

In First Student we continue to benefit from our ongoing pricing strategy, aiming to generate appropriate returns from a more focused book of contracts. Although the strong US employment market continued to cause driver shortages in some areas, we have responded with improved recruitment processes and marketing. With solid execution since the successful school start-up, we are well positioned to achieve our targeted margin progression for the year.

First Transit’s revenue performance in the third quarter benefited from organic growth and the commencement of new business, including the successful mobilisation of our first US commuter rail contract in Denton, Texas. In the period First Transit continued actions to recover the cost increases incurred in certain contracts in the first half.

Improving Greyhound volumes resulted in like-for-like revenue growth of 1.2% in the third quarter, benefiting from higher fuel prices than the comparable period last year and the continued development of our algorithmic pricing and yield management systems.

Industry-wide market conditions continue to be challenging for First Bus, with mixed Christmas trading for the UK high street and ongoing congestion issues in several local markets. Like-for-like passenger revenues decreased by 0.6% in the third quarter, a modest improvement on the first half. We continue to focus on cost efficiencies including ongoing depot consolidation to improve margins, while investing in our customer offering through smarter ticketing and real-time passenger information.

In First Rail third quarter like-for-like passenger revenue growth of 1.1% continued to reflect the moderating growth rates seen across the industry. The impact of the slowdown for GWR has been exacerbated by the volume of infrastructure upgrade work taking place on the network; TPE revenue performance continues to be above the industry average year to date. We continue to work closely with Transport for London and others to assist those affected by the tragic Tramlink incident which occurred in November 2016, and to support the ongoing investigations.

We were delighted that Hull Trains was named Rail Operator of the Year at the recent National Transport Awards. We recently announced the formation of two joint ventures with Trenitalia UK to participate in the East Midlands and West Coast Partnership rail franchise competitions.

In the third quarter the Group repaid $50m of private placement notes from cash balances.

Investor information
A conference call for investors and analysts will be held at 8:30am today. Please call [phone] in advance of the call to register and receive joining details. A playback facility will be available together with a pdf copy of this announcement at www.firstgroupplc.com/investors.

The Group is scheduled to announce results for the year to 31 March 2017 on Thursday 1 June 2017.

Contacts at FirstGroup:
Faisal Tabbah, Head of Investor Relations
Stuart Butchers, Group Head of Media
Tel: [phone]

Contacts at Brunswick PR:
Michael Harrison / Andrew Porter, Tel: [phone]

Notes
Unless otherwise stated, all financial figures for the 'third quarter' include the results of the rail business for the twelve weeks to 7 January 2017 and the results of all the other businesses for the three months to 24 December 2016, with growth compared to the comparable period in the prior year. References to ‘like-for-like’ revenue adjust for changes in the composition of the divisional portfolio, holiday timing, severe weather, business acquisitions or disposals, industrial action, other significant one-off events and other factors that distort the period-on-period trends in our passenger revenue businesses. No account is taken of foreign exchange translation effects in the descriptions of divisional performances and outlook.

Figures presented in this announcement are not audited. Certain statements included or incorporated by reference within this announcement may constitute ‘forward-looking statements’ with respect to the business, strategy and plans of the Group and our current goals, assumptions and expectations relating to our future financial condition, performance and results. By their nature, forward-looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Shareholders are cautioned not to place undue reliance on the forward-looking statements. Except as required by the UK Listing Rules and applicable law, the Group does not undertake any obligation to update or change any forward-looking statements to reflect events occurring after the date of this announcement.

FirstGroup plc (LSE: FGP.L) is a leading transport operator in the UK and North America. With £5.2 billion in revenues and 110,000 employees, we transported around 2.2 billion passengers last year. Each of our five divisions is a leader in its field: In North America, First Student is the largest provider of student transportation with a fleet of around 47,000 yellow school buses, First Transit is one of the largest providers of outsourced transit management and contracting services, while Greyhound is the only nationwide operator of scheduled intercity coach services. In the UK, FirstGroup is one of Britain's largest bus operators running a fleet of some 6,200 buses, and we are one of the country's most experienced passenger rail operators, carrying around 140 million passengers last year.

Our vision is to provide solutions for an increasingly congested world... keeping people moving and communities prospering.

Visit our website at www.firstgroupplc.com and follow us @firstgroupplc on Twitter.