FirstGroup plc announced the agreement of National Rail Contracts (‘NRCs’) with the Department for Transport (‘DfT’) for its South Western Railway (‘SWR’) and TransPennine Express (‘TPE’) train operating companies. The new NRCs will commence on 30 May 2021, when the current Emergency Recovery Measures Agreements (‘ERMAs’) come to an end. National Rail Contracts are a new contract structure for agreements between train operating companies and the DfT and the contracts for both SWR and TPE are among the first wave of NRCs to be announced. NRCs replace the previous revenue risk-based franchising system. The NRCs 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. Under the NRCs 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 per annum and there is the opportunity to earn an additional fee of up to £9.9 million which is the maximum attainable performance fee. For TPE the fixed management fee is £2.3 million per annum and there is the opportunity to earn an additional fee of up to £5.2 million which is the maximum attainable performance fee. The punctuality and other operational targets required to achieve the maximum level of performance fee are designed to incentivise the highest level of performance for customers.