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AGM statement 2006
Thursday 13 July 2006
Extracts from presentations made to shareholders at the Groups Annual General Meeting in Aberdeen today:
"The Group reported another year of excellent progress across all divisions. We have a clear strategy to deliver value for shareholders by growing our core businesses in the UK and North America and developing transport-related opportunities in new markets. We will continue to use the Groups strong and predictable cashflows to invest in our businesses, increase the annual dividend by 10% until at least 2008 and, where appropriate, make share repurchases, while maintaining our strong balance sheet.
"We are delighted with the performance of our Rail division. All of our operations performed extremely well delivering record revenue and profits. This demonstrates the strength of our rail franchises which have continued to deliver strong passenger volume growth. We have now secured additional longer-term revenue of over £1 billion per annum for up to 10 years with the award of the two new enlarged rail franchises First Great Western and First Capital Connect. We are now the UKs largest passenger rail operator and will continue to build on our reputation for innovation, investment and customer service. We have now submitted our bid for the new South Western franchise and remain confident about the Groups future opportunities in UK railways.
"In UK Bus revenue growth has continued to be strong and we have seen an encouraging trend of increased passenger journeys for the UK bus division as a whole. While significant cost increases, in particular fuel, continue to impact margins our strategy is to focus on operational performance while managing costs through more efficient practices and increased productivity. Our continued focus on service quality together with actions weve taken have delivered improved vehicle reliability, increased mileage operated to its highest level in four years and eliminated driver shortages. In May this year we launched ‘ftr our premium urban travel concept in York. The second ‘ftr scheme will launch in Leeds later this year and we are evaluating plans for further schemes in cities such as Sheffield, Swansea, Reading, Bath and Glasgow. The Governments new concessionary fares schemes offering free travel for senior citizens and disabled people were launched on 1 April 2006. We are encouraged by early indications that show the schemes are working well and concessionary fare passengers are making additional journeys.
"Our North America business performed well during the year. Since we entered the market we have delivered consistent returns with EBITDA growth of approximately 13% per annum since 2000. In First Student, where we operate over 21,000 yellow school buses, we were pleased to retain over 95% of existing contracts that came up for renewal and improve contract terms to better reflect the cost pressures we face. We continued to grow our market share through a combination of new contract wins, organic growth and acquisitions. In First Transit we were very pleased to retain a number of important contracts that came up for renewal including transit management and contracting business in Los Angeles and Denver. First Services continued its successful growth with a good trading performance and also an improved operating margin. In October we commenced operation of a substantial contract to provide land based support systems to the US Navy. Last week we were delighted to learn that we have retained, with our joint venture partners, a significant contract, to provide support services to the US Navy for up to 10 years.
"The board remains confident about the prospects for the Group. Trading in the first three months of the year has started well and is ahead of our expectations.'