First Group: General Discussion

[mbonwick]

What caused the second crash in share price?
http://www.firstgroup.com/corporate..._client_id=2899&ir_option=SS_GRAPHS&period=1D

Dropped heavily from around 220p to 172p between 8am and 10am as you'd expect after those results, but then started to recover slowly over the next 4 hours and peaked at around 186p at 2pm.

Then they dropped into freefall over the next two hours hitting a rock bottom low of 155p. What set off that second major decline when it was climbing slowly back up?

America's markets opening I expect....

 

[overthewater]

The telegraph article is quite an interesting one...

http://www.telegraph.co.uk/finance/...as-been-haunted-by-a-deal-agreed-in-2007.html

keeping hold of debt ridden local companies will not help.

 

[Deerfold]

keeping hold of debt ridden local companies will not help.

But then it might not be so easy to sell them now.

 

[WatcherZero]

That last line in the Telegraph article that their debt ratio will still only be 21% after the share sale and ratings agencies will be looking for a 25% minimum is a bit worrying. either their going to have to do a second share issue or raise 2/300m more from disposals of low revenue assets. The problem is that some of their low margin bits are the ones generating the most turnover.

 

[overthewater]

That last line in the Telegraph article that their debt ratio will still only be 21% after the share sale and ratings agencies will be looking for a 25% minimum is a bit worrying. either their going to have to do a second share issue or raise 2/300m more from disposals of low revenue assets. The problem is that some of their low margin bits are the ones generating the most turnover.

How about Denmark operations? or Irish coaches? first edinburgh or Cornwall?

 

[F Great Eastern]

Aircoach had a couple of days of a boost earlier this month when state operator Bus Eireann went on strike which would have helped the Cork and Belfast route doubt they made too much difference in the grand scheme of things though since the BE Belfast route was a joint operation with Ulsterbus who still ran their half of the services and the Cork Non Stop BE services still ran (as they are run by a third party) with only the stopping ones cancelled

If it went on for a bit longer and involved Irish Rail on Dublin Bus though it could have been of some decent sized benefit for the company as they'd have a lot of train traffic to mop up for the intercity routes and the only operator from Dublin to the Airport thanks to Dublin Bus being on strike - didn't happen though so whilst I expect them to have gained a few passengers, it wouldn't have been anything groundbreaking.

The smart money if a sale was to happen would still be on Citylink and ComfortDelGro though to be the purchasers, that rumour has been around for a while now and there has been more indications about that in the last couple of weeks, again could be nothing in it but it keeps coming up from several sources.

 

[DunsBus]

Martin Gilbert may have walked but part of the blame for First's problems must surely lie with some of the area managers who constantly stick the two fingers up at HQ every time a new venture is announced. It's these guys who are also strangling First and they need to be weeded out if the group is to stand any chance of starting afresh. The fact that First constantly bought new buses for the same fleets over and over again - Glasgow, Manchester, Leeds, Aberdeen, London etc while buying only token batches for elsewhere (and in most cases, leaving the unlucky areas to fight for the cast-offs) certainly didn't help either.

 

[mbonwick]

To a point I agree with you, but equally, look at what Stagecoach were ordering and for where in 2004-8 say. At that time a lot of stuff was only ordered for the big regions, though thankfully now things are done on an individual case basis so orders are much more even.

 

[winston270twm]

How about Denmark operations? or Irish coaches? first edinburgh or Cornwall?

First no longer have operations in Denmark, First exited them in 2011
http://www.railwaygazette.com/news/...l-out-of-troubled-dsbfirst-joint-venture.html

But who's going to want to buy businesses that are making large losses, need substantial fleet investment etc

 

[Volvodart]

In the analysts presentation yesterday, they said that they did look into selling a part of the US business before the rights issue was decided upon. Most of the US businesses are in recovery mode, to some extent, so now is perhaps not the best time to sell. Maybe they are waiting for their results to improve. They have time to wait with the rights issue.

 

[winston270twm]

In the analysts presentation yesterday, they said that they did look into selling a part of the US business before the rights issue was decided upon. Most of the US businesses are in recovery mode, to some extent, so now is perhaps not the best time to sell. Maybe they are waiting for their results to improve. They have time to wait with the rights issue.

Judging by how little of the rights issue funding raising is actually being used to pay down debts (Only £215 Million), the remainder is being retained towards the 4 yr £1.6 Billion investment programme announced, £340 million has been committed to being spent by March 31st 2014.

I think First are hoping the increased investment levels will boost the performance / profitability of each of the divisions and ultimately the increased profits / dividend reduction instead will be used to reduce debt levels

 

[overthewater]

That wont help, Northampton, Dalkeith and even linlithgow all got new buses all are now shut or on there way out...

 

[DunsBus]

That wont help, Northampton, Dalkeith and even linlithgow all got new buses all are now shut or on there way out...

Dalkeith depot had been on the ropes for a while, even when the Geminis were delivered there to convert the 86 to low-floor operation in 2005 they were seen as very much a last chance to improve its fortunes. As we all know, they didn't deliver the expected results and were transferred away to other First Scotland East depots, although a large part of the blame lies with Dalkeith itself since they never once made an effort to keep the 86 100% low-floor during the period the Geminis were allocated there. I also understand that Midlothian Council were not too happy about the regular use of Royales on the 86 alongside the Geminis, as it was a condition of the Sheriffhall Park & Ride that all buses serving it were to be low-floor.

 

[overthewater]

http://www.firstgroup.com/corporate/investors/presentations.php

Very interesting reading in the Transcript Page 12., or listen in to the audio around 45mins

 

[WatcherZero]

What that theyve written down £32.4m on the assets theyve disposed? Or where it says the rail bidding cost them £6m?

 

[swifty]

An interesting quote from Tim O'Toole on page 12 about Northampton & South Devon.

In South Devon and Northampton we are almost in a close-down mode trying to figure out Northampton getting two or more efficient, smaller operations, transferring some of those operations to other carriers so we can TUPE the employees across and give them the appropriate future. We are having to do some of that although it is not a big financial item that you would see.

Seems they had sellers lined up who walked away, and this is the result.

 

[winston270twm]

This article sums up First problems pretty well

http://www.heraldscotland.com/business/opinion/is-there-any-way-back-for-firstgroup.2013056283

 

[Volvodart]

What that theyve written down £32.4m on the assets theyve disposed?

The £32.4m includes £12.6m for the US disposal. Because of the way accounting works, the £19.8m for UK bus includes asset write-offs on the UK disposals (including London) and closed down operations, but the £15m to £20m profit on London disposal is not shown, as it will come into next year's accounts. The £19.8m also includes provision for future losses on Dagenham contracts.

 

[markie73]

An interesting quote from Tim O'Toole on page 12 about Northampton & South Devon.
Seems they had sellers lined up who walked away, and this is the result.

So its virtually certain that Northampton WILL be closed down given the comments made?, sounds like they will be gone by Christmas if not well before from Northampton.

 

[MK Tom]

So its virtually certain that Northampton WILL be closed down given the comments made?, sounds like they will be gone by Christmas if not well before from Northampton.

Sounded more to me like they were looking to create a more profitable operation they could sell on, seeing as they failed to before.

 

[overthewater]

Sounded more to me like they were looking to create a more profitable operation they could sell on, seeing as they failed to before.

Uno bus?

 

[markie73]

Uno bus?

Thats my thinking as well, maybe they will buy the remains of the First operation then use that as a launch pad for their expansion plans?.

 

[winston270twm]

First Group shares are down another 7.8% today to close at 134.6p, the ex Rights share price was thought to be 140p, so they have already passed below that

They are currently valued at £650 million, based on today's closing share price, if it falls much closer to £1 per share it would be worth a private equity group launching a takeover bid & break the group up

 

[overthewater]

First Group shares are down another 7.8% today to close at 134.6p, the ex Rights share price was thought to be 140p, so they have already passed below that

They are currently valued at £650 million, based on today's closing share price, if it falls much closer to £1 per share it would be worth a private equity group launching a takeover bid & break the group up

The price will fall further on Friday, but should bounce back come Monday morning.

I cant see a PEG buying first unless there believe there could make more buy selling off parts?

 

[winston270twm]

I cant see a PEG buying first unless there believe there could make more buy selling off parts?

That is my whole point, First will now be worth more broken up in to individual units & sold off than it is as a group. If a PEG has sufficient capital to take a First debt, its now quite a feasible option. The same nearly happened to NX after handing back the East Coast Rail Franchise

As discussed before, UK bus alone would be worth around £1+ Billion nearly double the current market cap of £650 million @ 134.5p

 

[overthewater]

That is my whole point, First will now be worth more broken up in to individual units & sold off than it is as a group. If a PEG has sufficient capital to take a First debt, its now quite a feasible option. The same nearly happened to NX after handing back the East Coast Rail Franchise

As discussed before, UK bus alone would be worth around £1+ Billion nearly double the current market cap of £650 million @ 134.5p

That could open up a can of worms, about who and what would get sold off, but of course if a Peg starts sniffing around that could push the shares back up.

 

[F1Ken]

How does First Essex do for First. Is it a profitable one because I haven't seen anyone mention it. They have bought a load of new hybrid buses for Chelmsford, Colchester has 1 or two new buses around.

 

[winston270twm]

That could open up a can of worms, about who and what would get sold off, but of course if a Peg starts sniffing around that could push the shares back up.

Anything is possible at the moment, it will be interesting to see if there is any weekend press speculation......

The share price is still falling, down another 5.3% to close at 127.4p, Mkt Cap now £614 Million

 

[overthewater]

Anything is possible at the moment, it will be interesting to see if there is any weekend press speculation......

The share price is still falling, down another 5.3% to close at 127.4p, Mkt Cap now £614 Million

Important bit:the share should bounce back up on Monday morning at least, and should stay 140p if not, and it bounce up and then falls again then trouble will happen.

 

[mbonwick]

If the share price is below 140.5p on the 10th June then the rights issue will be a failure as the shares could be bought for less than the rights issue price.