First Group: General Discussion

[DunsBus]

The big Q has to be what are this years account going to look like? Will the company get back in to profit? or just balance the books.

First has tried to do something with the depot but since a number of the routes are controlled to the Scotrail..... everyone knows the old saying.

Controlled routes shouldn't have anything to do with it. Running a reliable service is seemingly beyond Livingston's capabilities and has been for some years now. Add to that some of the 'repairs' they do to their vehicles are akin to what was being done in SBG days. Then you have vehicles running about with faulty front screens...

 

[robertclark125]

And it's proving difficult to get a current route network for the Livingston area. There isn't even anywhere in the town centre that I'm aware of that you can get information.

 

[overthewater]

And it's proving difficult to get a current route network for the Livingston area. There isn't even anywhere in the town centre that I'm aware of that you can get information.

Council office next to the post office OR the information deak opp BHS/Costa/ Small McDonalds, has started to put out timetables.

Most buses also carry them aswell now.

 

[sonic2009]

Have heard some rumours coming out of Worcester, I will say this is just a rumour don't know how accurate it is, having heard off a driver.

Worcester & Hereford apparently is going to be sold to Stagecoach, like i said i don't know how 100% accurate this is.

 

[winston270twm]

Have heard some rumours coming out of Worcester, I will say this is just a rumour don't know how accurate it is, having heard off a driver.

Worcester & Hereford apparently is going to be sold to Stagecoach, like i said i don't know how 100% accurate this is.

I had heard previously that whilst NX were in talks with First over the acquisition of Wyvern's RH & KR operations that NX also made an offer to acquire all of Wyvern & were turned down with a point blank no.

Worcester was always thought to be quite a profitable operation and First were quick to see off Rotala

 

[TheGrandWazoo]

I had heard previously that whilst NX were in talks with First over the acquisition of Wyvern's RH & KR operations that NX also made an offer to acquire all of Wyvern & were turned down with a point blank no.

Worcester was always thought to be quite a profitable operation and First were quick to see off Rotala

Quite true. I'd be very surprised if this happened. Can never say never, but more likely to be canteen gossip

 

[winston270twm]

Quite true. I'd be very surprised if this happened. Can never say never, but more likely to be canteen gossip

TheGrandWazoo, which bit are referring to as being quite true? The NX bit or WR being profitable?

Tbh, First seem to be in a much stronger position now, and the signs are that the big divisions within UK bus are improving performance through new vehicle investment & fare initiatives, therefore UK bus profitability should start to reverse the previous trend. I can't really see any need for First to sell off profitable operations only sell off or close down the loss makers......

 

[TheGrandWazoo]

TheGrandWazoo, which bit are referring to as being quite true? The NX bit or WR being profitable?

Tbh, First seem to be in a much stronger position now, and the signs are that the big divisions within UK bus are improving performance through new vehicle investment & fare initiatives, therefore UK bus profitability should start to reverse the previous trend. I can't really see any need for First to sell off profitable operations only sell off or close down the loss makers......

The profitability of Worcester bit - I should've been clearer

 

[winston270twm]

The profitability of Worcester bit - I should've been clearer

No worries, that's the bit I thought more likely

 

[TheGrandWazoo]

No worries, that's the bit I thought more likely

I sometimes think that these come up as there is little apparently happening, such as in Leicester, and people then think "oh, not much going on....must be getting to sell it"

Truth is, the age profile is that bad and the operations make money so management is focussed on other operations. I'm with you Winston; save the odd depot closure perhaps, I can't really see anything else going now. The rumours are that the trading is looking up (!) and I don't think rational people can now say that change isn't happening and that investment isn't being made

 

[overthewater]

I sometimes think that these come up as there is little apparently happening, such as in Leicester, and people then think "oh, not much going on....must be getting to sell it"

Truth is, the age profile is that bad and the operations make money so management is focussed on other operations. I'm with you Winston; save the odd depot closure perhaps, I can't really see anything else going now. The rumours are that the trading is looking up (!) and I don't think rational people can now say that change isn't happening and that investment isn't being made

Change IS happening as you say... but certain places its NOT!

 

[Robertj21a]

I sometimes think that these come up as there is little apparently happening, such as in Leicester, and people then think "oh, not much going on....must be getting to sell it"

Truth is, the age profile is that bad and the operations make money so management is focussed on other operations. I'm with you Winston; save the odd depot closure perhaps, I can't really see anything else going now. The rumours are that the trading is looking up (!) and I don't think rational people can now say that change isn't happening and that investment isn't being made

Apparently, Leicester starts a new route (19) shortly and will also be getting E400s from Dagenham.

Robert

 

[Deerfold]

Apparently, Leicester starts a new route (19) shortly and will also be getting E400s from Dagenham.

Robert

Not just apparently.

It goes to Braunstone from 27/10/2013:

http://www.firstgroup.com/ukbus/lei...e=18/19&routeid=2189551&operator=17&source=sp

http://www.firstgroup.com/ukbus/new_service_updates/attach_1381413092_19911_18 19 map Oct 2013.pdf


Combined frequency with the 18 will go from 5 to 8 buses an hour.

 

[TheGrandWazoo]

Change IS happening as you say... but certain places its NOT!

You can always point out exceptions but look at the business as a whole....

West Yorkshire - heavy investment in new vehicles and a mass repaint
Manchester - lot of new vehicles
York - network recast following consultation
Essex - Southend recast and new vehicles
Bristol and Avon - raft of service initiatives, new fare structure plus new vehicles for Bath (and due for Bristol) plus increasing speed of repaints
Somerset - Taunton new fare structure, and recast for Taunton/Bridgwater
Devon and Cornwall - repaints now starting and winning more work in Cornwall
Hampshire - Southampton and Portsmouth recasts with some new buses and a lot to come
South Yorkshire - new vehicles
Glasgow - full network recast and new vehicles
Berkshire - new buses and local ID for competing services

That's just off the top of my head; sure there's more I've not mentioned.

The supertanker that is First has begun to turn. Said it too many times... it didn't take two days to cock it up and that is always easier to do than to repair. Just rather sad that they had to close operations and the personal impact on some long serving employees

 

[overthewater]

Yes you are correct on every point you have made, but Supertanker that is First Scotland East has yet to turn around, and as its been pointed out are going back to the Traffic commissioner in three weeks time.

Will first just continue with its " lets wait and see plan" for the company? ie spend no money and end back in front of a TC next year?

 

[TheGrandWazoo]

Yes you are correct on every point you have made, but Supertanker that is First Scotland East has yet to turn around, and as its been pointed out are going back to the Traffic commissioner in three weeks time.

Will first just continue with its " lets wait and see plan" for the company? ie spend no money and end back in front of a TC next year?

Is it all of FSE? The Borders have received new kit, and the oft predicted demise of Musselburgh hasn't happened yet. If, and it looks like it, the era of disposals and closures has now concluded, then the ball will need to start rolling there (Central Scotland) soon.

As I said, you can't do everywhere at once, and whilst I know they've made one change with the X38, the rest appears to be awaiting some real action. Clearly, Livingston needs sorting and some investment in new vehicles is needed for the Bannockburn and Larbert depots. As for Balfron, well it's always been a bit of a working museum!

 

[winston270twm]

Is it all of FSE? The Borders have received new kit, and the oft predicted demise of Musselburgh hasn't happened yet. If, and it looks like it, the era of disposals and closures has now concluded, then the ball will need to start rolling there (Central Scotland) soon.

As I said, you can't do everywhere at once, and whilst I know they've made one change with the X38, the rest appears to be awaiting some real action. Clearly, Livingston needs sorting and some investment in new vehicles is needed for the Bannockburn and Larbert depots. As for Balfron, well it's always been a bit of a working museum!

First now seem to be turning the corner, they still have a long hard slog ahead of them, personally I don't think that they need to make any more disposals, certainly not of profitable/break even business units, due to Oft intervention First don't seem to be able to conclude deals easily and gain an attractive price. There is still the questions over the loss making businesses, but even those with investment/fare initiatives & increased work may be able to stem the losses without sale or closure

 

[TheGrandWazoo]

First now seem to be turning the corner, they still have a long hard slog ahead of them, personally I don't think that they need to make any more disposals, certainly not of profitable/break even business units, due to Oft intervention First don't seem to be able to conclude deals easily and gain an attractive price. There is still the questions over the loss making businesses, but even those with investment/fare initiatives & increased work may be able to stem the losses without sale or closure

I agree with you. Disposal and asset write down appears to be rather pointless especially after the Barnstaple precedent. And yes, it continues to be a long slog but there's naturally a process that goes from stemming the loss, stabilise, and then growth. Some are never going to make 20% margin but you're never going to in somewhere like Somerset or Cornwall.

Instead, you're going to have the case of somewhere like Cornwall where they can begin to increase their work (though council spending might scupper some of that), allied to fare and service initiatives, and perhaps get somewhere between 5 and 10% eventually but that's a long hard road!

In the shorter term, focus on the powerhouse operations and get them earning the real money to cover debt, investment and dividends.

 

[Robertj21a]

I agree with you. Disposal and asset write down appears to be rather pointless especially after the Barnstaple precedent. And yes, it continues to be a long slog but there's naturally a process that goes from stemming the loss, stabilise, and then growth. Some are never going to make 20% margin but you're never going to in somewhere like Somerset or Cornwall.

Instead, you're going to have the case of somewhere like Cornwall where they can begin to increase their work (though council spending might scupper some of that), allied to fare and service initiatives, and perhaps get somewhere between 5 and 10% eventually but that's a long hard road!

In the shorter term, focus on the powerhouse operations and get them earning the real money to cover debt, investment and dividends.

Would FGP shareholders be happy to 'carry' an operation (i.e Cornwall) that only contributed, say, 5% to the bottom line. Wouldn't they feel that some pruning would be more likely to retain a healthy dividend ?

Robert

 

[TheGrandWazoo]

Would FGP shareholders be happy to 'carry' an operation (i.e Cornwall) that only contributed, say, 5% to the bottom line. Wouldn't they feel that some pruning would be more likely to retain a healthy dividend ?

Robert

That does pre-suppose that the institutional investors are sufficiently bothered or concerned to drill that far down. As long as the overall margin is healthy and the dividend paid (and future plans mean that a rights issue isn't on the horizon), then many won't be too concerned by the odd lower performer.

Not every product in Tesco has the profit margin as it is clearly what the market will bear. Worth considering that 5% is also contributing to the overall overhead, and it does avoid exit costs; in fact, the axing of routes etc and the consequent transfer of the burden onto a reducing revenue base is one of the lessons First should've learnt (e.g. Northampton).

 

[winston270twm]

That does pre-suppose that the institutional investors are sufficiently bothered or concerned to drill that far down. As long as the overall margin is healthy and the dividend paid (and future plans mean that a rights issue isn't on the horizon), then many won't be too concerned by the odd lower performer.

Not every product in Tesco has the profit margin as it is clearly what the market will bear. Worth considering that 5% is also contributing to the overall overhead, and it does avoid exit costs; in fact, the axing of routes etc and the consequent transfer of the burden onto a reducing revenue base is one of the lessons First should've learnt (e.g. Northampton).

At the end of the day a profit is a profit, you can't realistically expect to earn the same margins in rurual op compared with a city op. If the big ops are earning nearer 20% margin & the smaller say only 5% or only just breakeven, the crucial thing is that the big ops are performing well & generating the profits to grow the overall UK bus performance & ultimately shareholder funds & dividends. UK Bus & First Student are First Groups two biggest contributors to group profits, it's those divisons where the decline in profits needs to be stemmed

 

[Robertj21a]

That does pre-suppose that the institutional investors are sufficiently bothered or concerned to drill that far down. As long as the overall margin is healthy and the dividend paid (and future plans mean that a rights issue isn't on the horizon), then many won't be too concerned by the odd lower performer.

Not every product in Tesco has the profit margin as it is clearly what the market will bear. Worth considering that 5% is also contributing to the overall overhead, and it does avoid exit costs; in fact, the axing of routes etc and the consequent transfer of the burden onto a reducing revenue base is one of the lessons First should've learnt (e.g. Northampton).

Agreed, but the smaller contributors to overall profit should still be the ones for pruning if/when necessary.

Robert

 

[tbtc]

Would FGP shareholders be happy to 'carry' an operation (i.e Cornwall) that only contributed, say, 5% to the bottom line. Wouldn't they feel that some pruning would be more likely to retain a healthy dividend ?

Robert

Its a fair question - worth considering that by keeping "marginal" areas like Cornwall, First have a dumping ground for their older stock (since they don't like selling midlife vehicles, unlike other operators) - so the low profit margins of some rural operations needs to be seen in the context of a convenient place to squeeze a few more years out of stock that still has some "book value" in the accountant-dominated FirstGroup.

 

[TheGrandWazoo]

Its a fair question - worth considering that by keeping "marginal" areas like Cornwall, First have a dumping ground for their older stock (since they don't like selling midlife vehicles, unlike other operators) - so the low profit margins of some rural operations needs to be seen in the context of a convenient place to squeeze a few more years out of stock that still has some "book value" in the accountant-dominated FirstGroup.

To be honest, Stagecoach and Arriva have particular operations and specific depots that are lower margin where older vehicles gravitate. For Arriva, places like Aylesbury or Hemel or Stagecoach with East Kent.

 

[DunsBus]

I think for Livingston they either need to bring in new management there which will work with Firstbus HQ, instead of against them, or else close the depot down. The invitation to "tea and biscuits with Auntie Joan" has become an all-too-regular occurrence for them over the years and despite pledges given by the FSE management that they will turn things round, it's not long before Livingston reverts to its old ways with the result being yet another TC appearance. As I mentioned in an earlier post Dalkeith depot had a similar "f**k you" attitude which was one of the contributory factors in its demise.

Sir Moir Lockhead once mentioned in an interview a few years back that First strove for 100% perfection and citied Heathrow as an example, saying anything less than 100% there would result in two crash landings a day. I suppose we can all be thankful that, given Livingston's track record, they don't operate aircraft!

 

[Volvodart]

Its a fair question - worth considering that by keeping "marginal" areas like Cornwall, First have a dumping ground for their older stock (since they don't like selling midlife vehicles, unlike other operators) - so the low profit margins of some rural operations needs to be seen in the context of a convenient place to squeeze a few more years out of stock that still has some "book value" in the accountant-dominated FirstGroup.

Some Stagecoach operations do not make a profit. For instance, Highland has hardly made a profit since they acquired it.

 

[Surreyman]

Some Stagecoach operations do not make a profit. For instance, Highland has hardly made a profit since they acquired it.

I seem to recall reading somewhere that with the exception of Inverness, every single route run by Highland was Tendered/Supported.
I was under the impression that Highland was 'in the black' with the exception of Orkney, where it looks like they are making changes - loads of new operating centres registered, mostly school sites, presumably to cut down on dead mileage (many of their services are dedicated school transport).
Back to First, I recently drove past Musselburgh depot for the first time in my life and was shocked to see what looked like a bus depot from the 1950s.

 

[Volvodart]

I was under the impression that Highland was 'in the black' with the exception of Orkney, where it looks like they are making changes - loads of new operating centres registered, mostly school sites, presumably to cut down on dead mileage (many of their services are dedicated school transport).

Orkney £122K operating profit and Highland operating loss £95K. Both had a lot better result for 2013 financial year than last year.

 

[Surreyman]

Orkney £122K operating profit and Highland operating loss £95K. Both had a lot better result for 2013 financial year than last year.

VOLVODART - You are clearly in 'the know', out of interest, without getting too bogged down in the figures, care to comment on what has caused/affected profit/loss and why recent results have improved?

 

[TheGrandWazoo]

Orkney £122K operating profit and Highland operating loss £95K. Both had a lot better result for 2013 financial year than last year.

Are those figures the right way round? I only ask as TAS Partnership on reviewing profitability of the industry in August had Orkney as Stagecoach's big loser (14.6%)