FirstGroup results drive shares on

Don't take the reported figures at face value. A 10 per cent decline in reported revenue reflected the loss of UK rail franchises, discontinued UK bus services and foreign exchange movements. Excluding these items, the top line actually grew 4.1 per cent. Last year was also a game of two halves: Greyhound margins deteriorated in the latter part of the year as cheaper fuel prices encouraged passengers to drive their own cars rather than take cross-country public transport. Meanwhile, profitability from the UK Rail business improved significantly over the period, reflecting growth in passenger revenues and the First Great Western franchise moving to better commercial terms partway through the year.

Margin growth was last year's crowning glory. The adjusted group margin rose from 4 per cent to 5 per cent, while margins from the UK rail division nearly doubled from 1.9 per cent to 3.4 per cent. Admittedly, it wasn't FirstGroup's best year for rail franchise wins; it lost the high-profile bid for Thameslink to a subsidiary of rival company Go-Ahead (GOG) in May 2014, and lost control of its existing ScotRail franchise to Dutch group Abellio the following October. But a surge in passenger volumes (up 4.2 per cent) pushed UK rail like-for-like revenue up 6.7 per cent and adjusted operating profit from £55.2m to £74.1m.

FirstGroup is still on track to transform its UK bus business. It wants to restore double-digit margins there by the end of 2017 by cutting costs as passenger volumes grow.

Analysts at broker Investec Securities expect pre-tax profit of £157m for the year to March 2016, giving EPS of 9.2p. This compares with £164m and 9.8p in the previous year.