First Group: General Discussion

[Robertj21a]

Rotala aren't even in the same sport let alone the same league. How would a merger (it wouldn't be - it would be a whale consuming a fish) solve the issues First has?

Very true, it would take a massive sell off to achieve anything worthwhile. Given the size of the problem I doubt that First selling off ALL their UK Bus operations would be of too much real significance.

 

[winston270twm]

Fell another 6% today, down to 83p a share seemingly prompted by Barclays cutting its valuation of the stock from £1.28 to £1.15. This 83p is a new all time low valuing the company at £1.01bn.

(i.e if share price falls any lower it will no longer be a billion pound company)

There was a sell off across the Stock Market (FTSE down 2.7%) with out of favour stocks such as First Group being those hit the hardest, the lower the share price goes the more chance of Break up bid being tabled
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Here's a long shot, and potentially ridiculous idea; a merger with Rotala? It would give cause for concern in Bristol and Bath with the presence of Wessex. But it would have the advantage of bringing Firstgroup into Preston, and giving a slight boost in terms of Greater Manchester territory with Diamond Bus north west. It would also see Rotala into Scotland.

There's also the west midlands presence.

Probably a non starter but just an idea.

A takeover or merger with Rotala would also add another £22 million debt to First Group's own pile, Rotala don't make the double digit profit margins either that First as *supposedly* striving for, more around the 3.7% level. First needs to get it's own house in order before it ever contemplates expanding again.
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Very true, it would take a massive sell off to achieve anything worthwhile. Given the size of the problem I doubt that First selling off ALL their UK Bus operations would be of too much real significance.

First Group are stuck between the devil & the deep blue sea.... any part of their business that could be sold off to raise enough cash to pay down debt sufficiently would also put a hole in their already weak group profits, thus leaving the debt that remains potentially harder to finance.

They really need to re-build their rail portfolio to improve turnover/cash flow & provide the group with more financing options going forward

 

[overthewater]

They really need to re-build their rail portfolio to improve turnover/cash flow & provide the group with more financing options going forward

Is time on its side? To stop any PEG? is that the short hand for it? ( private equity group?

 

[winston270twm]

Is time on its side? To stop any PEG? is that the short hand for it? ( private equity group?

I don't think time is in their favour, major shareholders must be getting pretty fed up with the constant issues why they're missing profits growth. All they are seeing is the value of their stakes tumbling.

At close at 83.9p/share, Mkt Cap stood at £1.011 Billion. At the half year to 30th Sept 2015 group nett debt stood at £1.588 Billion.

I think if someone pitched an offer somewhere between 35-40% mark up on today's closing price that may be enough to attract the interest of the major shareholders. The takeover price would come well in under the value of group debt, therefore a hedge could chose to break the group up & sell it off in parts or a private equity group could come in, put it's own leadership in to turn the group around with a view to merging or selling the whole group at a later date. The lower the shareprice goes the more attractive it becomes in the scenario's above.

 

[overthewater]

I for one don't believe a PEG could or would be a good idea for UK bus, there end up making further cuts, and we could see certain progresses which have been made be completely wiped out. It might be welcome back to 2009!

 

[Volvodart]

I wonder if this FSE speculation will turn out to be any more correct than all the rest...

You would hope that if there is any change it would be like yesterday's Stagecoach Glasgow depot closure and that it would be in the public domain after employees have been informed.

 

[Robertj21a]

I don't think time is in their favour, major shareholders must be getting pretty fed up with the constant issues why they're missing profits growth. All they are seeing is the value of their stakes tumbling.

At close at 83.9p/share, Mkt Cap stood at £1.011 Billion. At the half year to 30th Sept 2015 group nett debt stood at £1.588 Billion.

I think if someone pitched an offer somewhere between 35-40% mark up on today's closing price that may be enough to attract the interest of the major shareholders. The takeover price would come well in under the value of group debt, therefore a hedge could chose to break the group up & sell it off in parts or a private equity group could come in, put it's own leadership in to turn the group around with a view to merging or selling the whole group at a later date. The lower the shareprice goes the more attractive it becomes in the scenario's above.

I broadly agree with this, and have been saying much the same for some considerable time. One of the articles in a Stocks magazine recently referred to First Group as just 'Excuses, excuses, excuses' and it's easy to see how they came to that view.

If the undoubted talents of Tim O'Toole and Giles have made such little (relative) progress during their tenure then I doubt others at the helm would do any better. I've always thought that the Group would split up quite nicely into the obvious constituent parts and enable better focus on the key issues (no reason why it shouldn't also be possible as a large group, but it can get just too large).

 

[TheGrandWazoo]

I broadly agree with this, and have been saying much the same for some considerable time. One of the articles in a Stocks magazine recently referred to First Group as just 'Excuses, excuses, excuses' and it's easy to see how they came to that view.

If the undoubted talents of Tim O'Toole and Giles have made such little (relative) progress during their tenure then I doubt others at the helm would do any better. I've always thought that the Group would split up quite nicely into the obvious constituent parts and enable better focus on the key issues (no reason why it shouldn't also be possible as a large group, but it can get just too large).

The issue is the debt that is acting as a brake to the business. Then lose some rail franchises and that does your cash flow and profit no good.

To be fair to Giles, the UK bus business is turning round but it was always going to take time.

The problems with First School and Greyhound make me think greater surgery is required in disposing of those businesses. However, endless wittering about who might buy parts of UK Bus or mergers is, to be frank, missing the point!

 

[overthewater]

I wonder if this FSE speculation will turn out to be any more correct than all the rest...

You would hope that if there is any change it would be like yesterday's Stagecoach Glasgow depot closure and that it would be in the public domain after employees have been informed.

What FSE speculation would this be? Is it the whole company or a certain depot?

If its like Stagecoach Depot it would be in floating around for the last 5 months, and everyone including the cat would know that. :-?

 

[Volvodart]

I do not recall you saying that Glasgow was going to close.

 

[overthewater]

Still confused, what FSE talk? School contracts? I never mentioned that and I did say contract could and can change depots. Still what this got to do with first. If Its about stagecoach Glasgow depot even someone else has stated the drivers were told.

 

[smtglasgow]

Suspect that any ‘big’ decisions on First’s Scottish ops will be on hold until the current CMA investigation on First’s request to be released from earlier undertakings is concluded. If this goes First’s way, I think we’ll see a new pricing structure (more zones?) in the west, but something more significant in the east. But more detailed speculation only hurts staff that have been living under a cloud for far too long.

 

[overthewater]

Suspect that any ‘big’ decisions on First’s Scottish ops will be on hold until the current CMA investigation on First’s request to be released from earlier undertakings is concluded. If this goes First’s way, I think we’ll see a new pricing structure (more zones?) in the west, but something more significant in the east. But more detailed speculation only hurts staff that have been living under a cloud for far too long.

It would also allow FSE to compete more with others, and that could help its situation.

I agree nothing will be done at FSE until after the CMA investigation, which it really should be release from. Hopeful we will see a overhaul of the fares and zones, I doubt there will be more zone in west, more likely Forth Vallay. There been no speculation at this moment, just interest in the School contracts, which again First can happily pull out if the little dear's cause alot of damage to the buses or B the fuel cost to much (that not an issues at the moment)

 

[TheGrandWazoo]

What FSE speculation would this be? Is it the whole company or a certain depot?

Yesterday's posts at 19:07 and 19:41 - the latter from you. Do keep up

Aside from speculation on specific depots being rather insensitive, in the case of FSE, certain depots have been closed by some people on numerous occasions which points to it being incorrect speculation.

Perhaps a policy of wait and see might be wiser?

 

[overthewater]

Yesterday's posts at 19:07 and 19:41 - the latter from you. Do keep up

Aside from speculation on specific depots being rather insensitive, in the case of FSE, certain depots have been closed by some people on numerous occasions which points to it being incorrect speculation.

Perhaps a policy of wait and see might be wiser?

I thought that wasn't speculation, more to do who is running the contacts, especial since FSE is now two different companies. :-?

All I know is the deal fell thought for parts of FSE, and number of different sources can back that up. Also the person who got Dalkieth right also give out details of the other areas. This chapter is now closed, and has been for some time.

Muss depot, on the other hand still has two many questions over its head. Remember for sale sign put on it, talk of a merger with North Berwick. A housing company has plans waiting in the wings for the land, and First would be silly not to take the big sack of money it will get offered.

 

[TheGrandWazoo]

I thought that wasn't speculation, more to do who is running the contacts, especial since FSE is now two different companies. :-?

All I know is the deal fell thought for parts of FSE, and number of different sources can back that up. Also the person who got Dalkieth right also give out details of the other areas. This chapter is now closed, and has been for some time.

Muss depot, on the other hand still has two many questions over its head. Remember for sale sign put on it, talk of a merger with North Berwick. A housing company has plans waiting in the wings for the land, and First would be silly not to take the big sack of money it will get offered.

Oh, I do remember

"Musselburgh bus depot its seems now has a for sale sign on it, depending on who you talk to you will either getting the following responses:

First are moving to "Macmerry Industrial Estate"
First are closing up shop."

That was Jan 2014!!

The 19:07 was alluding to other possible events. You were hypothesising if First lost schools work.

There have been so many Bonafide reports on this thread... The two above ref: Muss doubtless came from unimpeachable sources?

 

[overthewater]

No I never said "First lost schools work" I said it could change between the companies depots and I also side First could pull out at any time because of damaged etc, that also effect the other companies as well and which I give example.

The for sale sign went up out around the time the housing company was planning to put in its application, alas it still hasn't been submitted but hopes to do so over the course of 2016.

 

[TheGrandWazoo]

No I never said "First lost schools work" I said it could change between the companies depots and I also side First could pull out at any time because of damaged etc, that also effect the other companies as well and which I give example.

The for sale sign went up out around the time the housing company was planning to put in its application, alas it still hasn't been submitted but hopes to do so over the course of 2016.

No, I said you were hypothesising "Its possible the First subsidiary could also change over the next 6 years. Especial if Larbart losses school work with the up coming new tender process in Falkirk area." That is a hypothesis!

As for Muss, it came from several reliable sources in 2014 - they're still at The Mall.

Perhaps just wait and see? How would YOU feel if people were speculating over YOUR job?

 

[robertclark125]

Someone mentioned the CMA inquiry into whether or not First East Scotland should be released from it's covenants, which I believe were imposed when it had the Scotrail franchise. I thought that it was automatically released when it lost the franchise, but it appears I was wrong. Any news on when an announcement and verdict can be expected?

As regards Musselburgh, given that Lothian buses also serve the town well, do people not think that if First had visions of closing the depot down, they'd have done so by now and conceded to Lothian? I reckon Musselburgh is staying.

 

[overthewater]

Perhaps just wait and see? How would YOU feel if people were speculating over YOUR job?

Not fussed.

Someone mentioned the CMA inquiry into whether or not First East Scotland should be released from it's covenants, which I believe were imposed when it had the Scotrail franchise. I thought that it was automatically released when it lost the franchise, but it appears I was wrong. Any news on when an announcement and verdict can be expected?

As regards Musselburgh, given that Lothian buses also serve the town well, do people not think that if First had visions of closing the depot down, they'd have done so by now and conceded to Lothian? I reckon Musselburgh is staying.

There were two controls placed on the company, one for Scotrail and the other one inconnection with the Scottish bus group holdings from 1997 when First controlled the whole Central belt. That latter control also state First must operate a min number of miles and its this one First are hoping to get rid of.

 

[d1672]

Hi,

More service cuts then I take it.

Thomas

 

[overthewater]

Hi,

More service cuts then I take it.

Thomas

Not necessarily. It may be more to do with the fares.

 

[TheGrandWazoo]

Not fussed.



There were two controls placed on the company, one for Scotrail and the other one inconnection with the Scottish bus group holdings from 1997 when First controlled the whole Central belt. That latter control also state First must operate a min number of miles and its this one First are hoping to get rid of.

SB Holdings was Strathclyde Buses not SBG.

Glad you're not fussed about losing your job. Most people would be

 

[THarris123]

SB Holdings was Strathclyde Buses not SBG.

Glad you're not fussed about losing your job. Most people would be

In all fairness i'm not either. Depends I guess on your amount of other income one has (mine is miniscule, but I still hate my job). You're right to point it out though

 

[TheGrandWazoo]

In all fairness i'm not either. Depends I guess on your amount of other income one has (mine is miniscule, but I still hate my job). You're right to point it out though

Also, to be fair, it depends on your stage in life. When younger, you tend to have few financial commitments (e.g. mortgages), fewer dependents (e.g. kids) and more time.

However, got to remember that people don't enjoy the speculation generally especially if you might lose your job. No guarantees that you'll get a job, or one with the same pay and conditions, or that you won't have to travel to a new location - not nice to have 30 mins added to the start and finish of your working day.

 

[tbone]

According to Giles Fearnley's speech at the UK Bus Summit, an extra 70,000 journeys a week are being made on the First Bristol and Bath network. Shows what a change in attitude and management can do- maybe there is hope for First bus UK after all.

 

[winston270twm]

According to Giles Fearnley's speech at the UK Bus Summit, an extra 70,000 journeys a week are being made on the First Bristol and Bath network. Shows what a change in attitude and management can do- maybe there is hope for First bus UK after all.

Although the figures are quite impressive, Bristol accounts for less than 10% of First UK bus, First needs to be achieving these kind of growth results in the bigger subsidiaries in numerous locations to stand any chance of turning things around once & for all. They particularly need to pull something out the bag on the other side of the pond & drop the constant excuses......
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I suspect some of the extra Bristol & Bath passenger growth is actually down to increased competition with Wessex & at the expense of their UWE loadings/tendered work rather than true passenger growth by encourage new people to use the bus

 

[TheGrandWazoo]

Although the figures are quite impressive, Bristol accounts for less than 10% of First UK bus, First needs to be achieving these kind of growth results in the bigger subsidiaries in numerous locations to stand any chance of turning things around once & for all. They particularly need to pull something out the bag on the other side of the pond & drop the constant excuses......
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I suspect some of the extra Bristol & Bath passenger growth is actually down to increased competition with Wessex & at the expense of their UWE loadings/tendered work rather than true passenger growth by encourage new people to use the bus

Whilst undoubtedly some are the result of actions against Wessex, it is clearly a good performance.

I wouldn't be too sniffy about the West of England business. It is one of the bigger and indeed better OpCos.

However, I'm with you that a fundamental change in the business is needed - the idea that things can be solved by tinkering is long past.

 

[winston270twm]

Whilst undoubtedly some are the result of actions against Wessex, it is clearly a good performance.

I wouldn't be too sniffy about the West of England business. It is one of the bigger and indeed better OpCos.

However, I'm with you that a fundamental change in the business is needed - the idea that things can be solved by tinkering is long past.

I don't deny it's not a good performance, but to get UK bus back on track, First really need to be delivering the same sort of growth results at their biggest OpCos such as Glasgow, Manchester, South Yorskhire & West Yorkshire. They also need to sort the loss makers out once and for all such as FSE

 

[TheGrandWazoo]

I don't deny it's not a good performance, but to get UK bus back on track, First really need to be delivering the same sort of growth results at their biggest OpCos such as Glasgow, Manchester, South Yorskhire & West Yorkshire. They also need to sort the loss makers out once and for all such as FSE

IIRC, First West Yorkshire is the best performing OpCo (and Manchester is decent too). For Glasgow, they're hamstrung by the SB Holdings covenants so it's tricky and South Yorkshire should be better once the bus partnership benefits start to be realised.

The challenges are certainly in those OpCos that are in thinner territory or those that have been systematically mismanaged. They'll never make a fortune in some areas but there's others that should be diamonds in the rough.