Bus funding programme
FirstGroup plc (‘FirstGroup’ or ‘the Group’) welcomes the finalisation of a further funding programme from the Department for Transport (‘DfT’) to support the provision of additional vital services by regional bus operators in England during the ongoing coronavirus pandemic. The new COVID-19 Bus Service Support Grant Restart programme builds on the support arrangements previously announced on 3 April and which were due to expire in June.
Regional bus operators in England have initially been allocated £254m in additional funding by DfT under the programme which will allow us to increase bus service capacity in support of our communities as Government guidance on travel restrictions begins to ease. The funding amount will be kept under review to ensure that increased services can be sustained while ensuring there is enough space for passengers to observe social distancing guidelines.
The programme, which runs for an initial twelve week period backdated to 12 May, is designed to support the industry while social distancing guidelines require buses to run substantially below their potential capacity. Bus operators will be able to claim funding support for the difference between their revenue from passenger and other non-tendered contractual sources and the costs of operating the services. Recoverable costs under the programme include all reasonable operational costs as well as depreciation, pension funding and debt finance costs reasonably allocated to English local bus services. Operators will be responsible for agreeing with local authorities the level of service to provide in each area to meet local demand for bus services as the lockdown restrictions ease.
The programme builds on previous commitments from the DfT, Scottish and Welsh Governments to continue to (either themselves or by directing local authorities to) fund the Bus Service Operators Grant, concessionary fares and contracts for tendered services at levels prior to the pandemic. Discussions are taking place with both the Scottish and Welsh governments to secure the additional funding necessary to support increases in bus service capacity through the recovery period.
First Bus continues to lead the industry with the introduction of a number of measures to support adherence to government guidelines, offering safe, socially distanced space across its bus fleet. Building on the passenger counting functionality announced last week, First Bus is introducing enhancements to the live tracking feature on its app by allowing customers to check in real time how full each bus is, helping them to make more informed travel decisions. We continue to encourage cashless payments, and use of the app to purchase mTickets, to reduce the need for contact between passengers and drivers. First Bus has also deployed seat signage to help ensure passengers are appropriately distanced from each other and has established enhanced cleaning protocols to help keep our passengers and employees safe. Further enhancements will be made to First Bus’s cleaning regimes during June, including the use of a virucide designed to provide protection for up to 30 days.
Commenting on the new funding programme, Matthew Gregory, FirstGroup Chief Executive, said: “This new funding will enable us to provide additional bus services that will deliver a progressive increase in capacity across our networks, while maintaining the necessary distancing in line with government and public health authority guidance.
“Our bus services perform a unique and essential role in sustaining local economies and communities, and in delivering real improvements to air quality and congestion. As restrictions are gradually eased we will be ready to respond quickly to resume services that will reconnect people and re-open communities.
“We are introducing a number of industry-leading measures to help ensure that government guidelines are observed across our fleet and that we offer clean, safe, socially distanced space for passengers and our employees. These measures range from innovative capacity tracking technology to seat signage ensuring that appropriate distancing is followed.
“I want to express my gratitude and thanks to all our employees who are working so hard to keep vital bus services running at this difficult time.”
Update on liquidity position
As at 26 May 2020, the Group’s undrawn committed headroom and free cash was stable at £770m. For the first month of the current financial year, cash generated by operations in our Road divisions and for the Group as a whole was positive and ahead of our projections at the outset of the month.
On 4 May S&P Global Ratings affirmed its long-term issuer credit rating on the Group at BBB- whilst revising the outlook to negative from stable, in line with Fitch Ratings’ position.
The Group has followed UK regulatory advice to review our full year reporting timetable in light of the widely publicised challenges facing companies in completing audits at the present time. The Group intends to publish its full year results on 8 July.