Hi Floodland, welcome to FGP

You may have seen from earlier posts that I have still not received the latest annual report so I cannot refer to the numbers, but here is a potted history of FirstGroup.

FirstGroup (or FirstBus as it then was) was created in 1995 by the merger of two plcs, Badgerline and Grampian. Badgerline operated buses in the South West and Essex/East London and Grampian operated buses in Aberdeen, Edinburgh and Leicester. Just before the merger, Badgerline bought Rider Group in West Yorkshire and subsequently FirstGroup has become the predominant bus operator in the major conurbations. (The only significant missing bit is the West Midlands, operated by National Express). Bus patronage in the UK has been declining since the late '50s so the fundamental problem is always to persuade fewer people to part with more of their money each year. IMHO this problem will persist until National and Local Government start to do something to stop people using their cars ie close roads and shut car parks. Until then, do not expect huge growth from the UK bus operations.

FirstGroup then backed the management team that won the franchise to run Great Western Trains - a profitable franchise. Armed with this experience they then won the Great Eastern franchise (a profitable and well-run franchise) and supported the Great Western management when they won the North Western franchise (not a profitable franchise). Not many of the commuters on Great Western will agree that FirstGroup know how to run trains but the real problems on that line are caused by a shortage of capacity so need to be resolved by Railtrack. This will ultimately mean higher track access charges but does not involve any capital expenditure for FirstGroup.
(The FT has an article today on how the revised franchises will look and FirstGroup should be in with a good chance of keeping most of their existing franchises and maybe winning the new Transpennine Express - if they want it).

They have announced the sale of their share in the joint venture in Hong Kong - at a profit, I think.

Bristol Airport is reasonably profitable but they need to decide if this is a market in which they wish to operate. No point just having the one!

Which leaves America. I don't know too much about it but FirstGroup have never been the first to enter new markets as they have always waited until they found the right acquisition at the right price. The latest press releases suggest that they have done it again with this acquisition.

The Group has been highly acquisitive in the past so does have a fair amount of borrowing. However, even allowing for the odd place in which lines are drawn on the Balance Sheet, the core UK Bus and Rail business is highly cash generative and IMHO the Group should be more than capable of supporting the current level of borrowings.

In terms of LTBH shares in this sector, I think the choice is between FGP and National Express. I have chosen FirstGroup but you must make up your own mind.

Good luck.

HarrysDad