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FirstGroup Signs National Rail Contracts For South Western Railway And Transpennine Express

FirstGroup plc (FGROY.PK,FGROF.PK,FGP.L) said that it has signed new National Rail Contracts with the U.K.'s Department for Transport or 'DfT' for its South Western Railway or 'SWR' and TransPennine Express or 'TPE' train operating companies.

The new contracts will commence on 30 May 2021, when the current Emergency Recovery Measures Agreements come to an end.

The contracts replace the previous revenue risk-based franchising system. The contracts have a primary two-year term to the end of May 2023 for both SWR and TPE, and both have an option to be extended by up to two further years at the DfT's discretion.

As per the contracts, the DfT will retain all revenue risk and substantially all cost risk. For the Group's 70% share of the First MTR joint venture for SWR the fixed management fee is 3.3 million pounds per annum and there is the opportunity to earn an additional fee of up to 9.9 million pounds which is the maximum attainable performance fee.

For TPE the fixed management fee is 2.3 million pounds per annum and there is the opportunity to earn an additional fee of up to 5.2 million pounds which is the maximum attainable performance fee.

Both train operating companies will work collaboratively with industry partners and stakeholders to build back patronage, while delivering plans to upgrade service offering.

The plans include the introduction of flexible commuter tickets and continuing to facilitate a move towards electronic and mobile ticketing, smartcards and improved apps for both companies.

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