First Bus reported revenues of £870.9m (2015: £896.1m) for the year, with like-for-like passenger revenue (excluding the contribution from closure and disposal of businesses) increasing by 0.3%.
Revenues in the second half of the year were adversely affected by lower than expected passenger volumes, driven by lower high street retail footfall, exceptionally wet weather, flooding and congestion impairing services in several of our markets. This has been coupled with a reduction in tendered contracts funded by local authorities in a number of our markets, and some evidence of lower fuel prices encouraging more car usage.
We continued to experience weakening concessionary revenues throughout the year, while like-for-like commercial passenger revenues increased by 1.1%. Our markets in the south of the UK continue to see more positive trends than our operations in the north and Scotland.
We have been taking action throughout the year to offset the challenging market backdrop by merging or closing a number of depots and reducing administrative overheads in order to maintain our margin progress. Adjusted operating profit was £52.0m (2015: £51.8m) and adjusted operating margin was 6.0% (2015: 5.8%), after the restructuring costs of £3.8m (2015: £1.4m) incurred in the year. Overall we delivered cost efficiencies of more than £20m in the year.
Our local management teams are continually reviewing networks, timetables and pricing strategies to ensure we are focused on local market needs and growth opportunities. We work closely with all our local authority partners as they respond to their own financial pressures and review their tendered services, looking to find ways to integrate such services into the commercial network wherever possible.
Networks serving universities and hospitals are also important to our local growth plans. During the year we secured rights to serve both York and West of England university campuses and developed a commercial network serving Swansea Universitys new site.
We have enhanced our service to Bristols Southmead Hospital and the new Queen Elizabeth University Hospital in Glasgow. In Bristol several changes to key corridors and the night bus network have also contributed to good volume growth. We have also been progressively replacing single deck vehicles with double deckers to increase capacity. However, our ambitions in Bristol and some other cities are increasingly hindered by growing congestion, which frequently sees central Bristol gridlocked.
We continue to bid for tender contracts, securing a five year car park contract at Dublin Airport and beginning operation of the first Park & Ride service in Leeds. We are the preferred bidder for the second. In Manchester we secured the contract for Vantage, a flagship investment in BRT by Transport for Greater Manchester, which started operating in April 2016. We were also the lead contractor for the Rugby World Cup, providing spectator transport to Twickenham and Milton Keynes stadia and VIP and media transport for all venues.
Through our depot optimisation and maintenance enhancement programmes, and continued investment in our bus fleet, we remain focused on punctuality and service reliability, which alongside value for money are key drivers of passengers appetite for bus services. We have also delivered cost reductions of more than £20m in the year. Across the business, efficiencies have been delivered through reduced fuel consumption and better procurement, scheduling and engineering processes.
We have further optimised our operating bases depots at Parkhead in Glasgow and Newcastle-under-Lyme have been closed with operations transferring elsewhere. In Colchester we invested in a new depot replacing three sites and Bracknell and Braintree operations have been scaled back with certain services now operated from nearby sites. The year saw the closure of our Hereford depot and the sale of the residual South Devon business. Structural changes have also been made to our final salary pension schemes to reduce cost.
Undertakings dating back more than a decade, which placed several restrictions on our flexibility to adjust fares and timetables in our Glasgow and Scotland East businesses, have now been lifted by the Competition and Markets Authority. After the year end we announced the closure of two depots in the region as we respond to current market conditions.
We continue to invest in our mobile and digital platforms to improve our customers ability to find service information more simply and reliably. We now offer mobile ticketing across all of our services and are developing enhanced mobile capability to provide multi-modal planning, real time travel information and smart ticketing.
We are also working with data aggregators such as CityMapper and Google Transit to make our real-time information more widely available. Our website has been relaunched with easy to use journey planning, latest information and search functionality. We have delivered our commitment to multi-operator smart ticketing across the city regions in England and are working to deliver a similar scheme for the key city regions in Scotland. We have also committed to work over the coming year with other operators to develop plans to bring contactless EMV technology to our services
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A fundamental part of our transformation is fleet renewal. In the year we took delivery of 385 vehicles and have announced a £70m order for a further 305 buses since the year end. All buses delivered since mid-2015 are equipped with Euro VI engines, Wi-Fi as standard and an increasing number have USB charging points and next stop audio visual announcements. These investments improve our customer offer, ensure our compliance with disability access legislation and make a major contribution to the clean air agendas of the cities we serve.
Buses remain a critical enabler of economic growth, with more commuters reliant on the UK national bus network every day than on any other form of public transport. We share the aim of local councils and national Government to get more people out of their cars and using buses. In November we welcomed confirmation that Government funding of the Bus Services Operators Grant (BSOG) in England will be maintained through to 2020/21.
We are delighted that the new Bus Services Bill gives strong support for enhanced partnerships and provides additional tools for councils and operators jointly to deliver improvements for customers. We believe that local authorities objectives for bus services in their area are best delivered through partnerships where the commercial incentive remains with the operator, rather than a complex franchise-based alternative which may not deliver changes or benefits for some years, and where financial risk and additional cost passes to the local authority.
We continue to explore opportunities to work in closer partnership with local authorities in our markets, building on the success we have had to date in increasing both passenger volumes and satisfaction. In November the Sheffield Bus Partnership introduced a new network focused on the economic and social needs of the city while ensuring resources are closely matched with demand. We have also worked to deliver a Rotherham Partnership and one for Doncaster (implemented in May 2016).
In Cornwall, we are working increasingly closely with the County Council to deliver a fully integrated public transport network embracing information, ticketing and connections with rail. We were a sponsor of Bristol European Green Capital 2015, during which we trialled a number of bio-methane and advanced hybrid buses, which are influencing our discussions with Bristol on future fuel technologies.
Our strategy is based on delivering an increasingly digitally enabled customer proposition coupled with sustainably improved operating disciplines and strong local authority partnerships. We believe this is the most responsive, efficient and cost-effective way to deliver the outcomes that bus passengers, local
FirstGroup | Preliminary results for the year to 31 March 2016 14
authorities and taxpayers want and we will continue to enhance our ability to deliver these outcomes going forward.
We expect market conditions to remain challenging in the year ahead. We therefore expect moderate margin progression from the full year benefits of past cost saving actions, additional cost and operational efficiency initiatives and some benefits from our fuel hedging programme.
