FirstGroup’s ‘material uncertainty’ revealed as it records £300m loss

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Transport giant FirstGroup has seen shares tumble after flagging doubts over its future amid the coronavirus pandemic as passenger numbers plunged and it slumped to a £300 million loss.

Shares in the bus and rail firm – which runs train franchises including South Western Railway and Avanti West Coast, as well as open access operator Hull Trains, plummeted as much as 18 per cent after it revealed a “material uncertainty” over its ability to continue as a going concern.

It saw pre-tax losses widen to £299.6 million for the year to March 31 from losses of £97.9 million the previous year after booking a raft of charges – including a £21.5 million hit for the Covid-19 crisis.

The group said passenger numbers across its UK and international services plummeted by around 90 per cent in March as countries were placed into lockdowns.

It said ongoing guidance to limit travel and social distancing measures will continue to have a “significant impact on our service capacity and financial performance”.

The firm has tapped into the UK’s Covid Corporate Financing Facility for £300 million, with support also expected in the US for its Greyhound coach arm.

It warned over the risks surrounding state support schemes and a recovery in demand among cautious passengers, but stressed it had “adequate” resources to carry on operating for the next 12 months.

One of Hull Trains’ new £60m Paragon fleet

Chief executive Matthew Gregory said: “We do not yet know the rate and extent of demand recovery, nor how long restrictions or social distancing will be in place.

“Nor do we know how government and customer support might taper, although it’s clear that governments and customers understand the key role that our services play.”

He added: “The importance of public transport to society has never been more clearly demonstrated, and we will continue to take all necessary measures to enable the group to emerge from this unprecedented situation in a robust position.”

Hull Trains hasn’t restarted operations since the pandemic, with pleas for help not answered. It invested £60 million in a new fleet ahead of the lockdown, with 130 jobs on the line.

Results showed First Group’s bottom line was also hit by a £186.9 million impairment charge for its Greyhound coach business in the US, which it has been struggling to sell.

The firm has since put its entire North American business up for sale – including the First Student and First Transit businesses – following pressure from an activist investor.

But it admitted that the coronavirus crisis has slowed the sale process.

Transport expert Gerald Khoo, at Liberum, said the full-year results showed a bigger-than- expected impact from the pandemic in the final few weeks of trading.

He added: “Support from governments and customers has been crucial to allowing the group to remain cash-generative in the first quarter.

“We expect this support to continue, but any wavering of such support is a key risk.”


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