FirstGroup (LSE:FGP) reports half-year numbers on 17 November, shortly before Great Western Railway passes into public ownership, leaving investors focused on the growing importance of its bus and open access businesses.

FirstGroup (LSE:FGP) is scheduled to publish results for the six months to the end of September on 17 November, at a moment of considerable change for the transport operator. The group's contract to run Great Western Railway is due to expire on 13 December 2026, when services will transfer to the Department for Transport's operator, and the West Coast Partnership, which includes Avanti West Coast, is expected to follow around the end of the current financial year in late March 2027.

There has been no detailed trading update since the summer. At the Annual General Meeting on 29 July the company said year-to-date trading was in line with the expectations set out in its full-year results and in that day's announcement of an agreement to sell its Mistral Data business. Chief executive Graham Sutherland said the portfolio, asset base and cash-generating operations would support continued growth and further meaningful returns to shareholders.

About the company

FirstGroup is a UK transport operator whose activities are split mainly between buses and rail. First Bus runs local and regional services across England, Scotland and Wales and has expanded into London, while First Rail covers franchised train operations under government contracts as well as open access services on routes such as those to Stirling and on the East Coast.

The group earns money in different ways across divisions. Bus Revenue comes from passenger fares and from public funding for services and fare schemes, with margins depending on volumes, costs and funding terms. Franchised rail operations are typically management-style contracts under which the operator is paid a fee by the Department for Transport, so profit is limited but Capital needs are modest. Open access trains, by contrast, carry commercial risk but offer higher potential margins once services mature.

The 52 weeks to 28 March 2026 saw adjusted revenue rise 25% to £1,715.7m and adjusted operating profit ease to £219.4m. Adjusted Earnings Per Share rose to 20.3p and the Dividend to 7.2p. First Bus delivered adjusted operating profit of £102.8m, while First Rail's was £129.9m, and the board launched a £100m buyback following a £50m programme the year before.

A changing earnings base

The results for the 52 weeks to 28 March 2026, published on 18 June, provide the starting point. Adjusted revenue increased 25% to £1,715.7m, adjusted operating profit eased to £219.4m from £222.8m, and adjusted earnings per share rose to 20.3p from 19.4p. The full-year dividend grew to 7.2p from 6.5p.

First Bus has become a much larger part of the group following its expansion into London, with revenue up 33% to £1,443.6m and adjusted operating profit up 7% to £102.8m. Its Margin fell to 7.1% from 8.9%, as the Business contended with a £26m reduction in fare funding and about £15m of higher employer National Insurance costs. Regional bus passenger volumes declined 3%, largely as a result of the move to a £3 fare cap.

First Rail reported adjusted operating profit of £129.9m, down from £148.8m. Its open access operations, which are not affected by the nationalisation programme, generated revenue of £109.3m but a lower profit of £25.6m, reflecting the cost of mobilising services to Stirling and competition on the East Coast route.

How rail nationalisation changes the model

Moves to bring passenger franchises into public ownership are altering the shape of the UK rail industry. For FirstGroup, the effect is a gradual shift away from franchised rail, where profits are modest, and toward buses and open access, where returns depend more on commercial performance. Management has already quantified the effect of the Great Western transfer on profit and earnings, which helps frame expectations for the second half of the financial year.

The company has also described contracts to provide services to the government's operator, so the rail exit is not a complete Withdrawal from the sector. The balance between these businesses will determine how earnings quality changes over time.

Points to follow at the interim stage

Interim results offer an update on bus margins, where funding changes, fare caps and employment costs have all been important. Readers may follow passenger volumes, the ramp-up of open access routes and the progress of London Overground operations, which began in May.

Capital allocation is a further theme. Cash generation, adjusted net debt, Lease obligations and the pace of the buyback will show how the group intends to balance reinvestment with returns as the rail contribution reduces.

Guidance and returns

The company expects to maintain adjusted earnings per share in the current financial year. First Bus is forecast to generate revenue of just over £1.5bn with further profit growth, and net Capital Expenditure of about £140m. Open access revenue is expected to reach £130m to £150m, with margins moving to the mid-teens after a ramp-up of about two years. The transfer of GWR is expected to reduce adjusted operating profit by around £15m and earnings by about £9m.

Cash generation of more than £400m is forecast over three years, including about £90m from the Department for Transport train operating companies and rail services. A £100m share buyback, expected to complete over the following 12 months, was announced in June, following a £50m programme in the previous year. The most recent transaction in own shares was disclosed on 9 November.

Adjusted net Debt stood at £137.7m at the end of the last financial year, up from £86.9m. Reported net debt was £725.3m, including £850.0m of lease liabilities.

Mr Sutherland has said the results reinforced the group's record of delivery and Shareholder returns, and has set out an ambition for FirstGroup (LSE:FGP) to be a leading UK transport company with active, long-term partnerships. London Overground operations began in May, with anticipated annual revenue of about £300m.

Interim results should provide a clearer picture of how the transition is proceeding, including the extent of any contract exit effects, the terms of the Mistral Data sale, and whether the board intends to supplement its returns further.