FirstGroup has announced a rise of more than 10% on its share price after the bus and rail operator reported increased profits for the year.

The company now says that there is a more positive outlook for the future on the back of these profit increases as it continues to rebuild from the loss of a key UK franchise back in 2012.

Chief Executive of FirstGroup, Tim O’Toole, told investors that the firm has a good feeling about the rest of the year and is anticipating a significant rise in net cash generation after many years of reinvestment.

FirstGroup was stripped of the UK’s West Coast Rail franchise four years ago because of flaws in the bidding process, which resulted in a £615 million rights issue, and has since been on a steady road to recovery.

Mr O’Toole admitted that there are still challenges ahead for the group, but the adjustments that have been made have ensured that FirstGroup remains in a strong position.

He added that the efficiency programmes and disciplined contract bidding are set to bring about a change in fortunes for the company this year.

His forecast came shortly after FirstGroup posted a positive full set of results for the year in spite of a fall in revenues.

Staff shortages in the US, along with adverse weather in the UK, meant that the group issued a profit warning for January, although yearly profits up to March 31 came in ahead of the low expectations of several analysts.

After the firm lost out on several rail contracts, company revenues went down by 14% to £5.2 billion, although the organisation said underlying value in other areas of the business was broadly flat. Subsequently, profit before tax rose by 7% to £114 million.

The company generates the bulk of its revenues in North America, where the operator was negatively impacted by reduced passenger demand and a lack of drivers, with reduced fuel prices cutting motoring costs.