First Group: General Discussion

[Volvodart]

Close, Manchester made hardly any profit in the last accounts (0.8% operating profit). It was only West Yorkshire that did well, with Glasgow having a half decent margin of 9.3%.

 

[TheGrandWazoo]

Close, Manchester made hardly any profit in the last accounts (0.8% operating profit). It was only West Yorkshire that did well, with Glasgow having a half decent margin of 9.3%.

Really - Manchester had a 9% margin in 2013?

 

[Surreyman]

Close, Manchester made hardly any profit in the last accounts (0.8% operating profit). It was only West Yorkshire that did well, with Glasgow having a half decent margin of 9.3%.

Any chance of you quoting the margins of all the Uk bus subsidiaries?

 

[overthewater]

Im sure First Glasgow, isn't truly hamstrung by the SB Holdings, only First Scotland East. First Glasgow I think managed to get out of most of it because of all the competition, trains, subway, all those nice other companies. The route which were controlled where because of Scotrail. Can any one prove this to be the case? Especial since the its now a flat fare system in Greater Glasgow and the amount of changes or cuts in certain areas. :-?


Lets look at the accounts:

FIG NO1 Up to March 2015

Turnover...£85,112,000
Cost.........£78,057,000
Profit........£7,055000

FiG No2

Turnover...£42,6792,000
Cost.........£37,815,000
Profit........£3,684 00 Tax and interest payments taken off.


First Manchester This is VERY Interesting.

Turnover...£89,935,000
Cost.........£89,190,000

Net interest receivable and similar charges £2,968 000

Profit on ordinary actives before taxation £3,713, 000
(charge) £708,000

Profit........£3,005, 000

 

[Mr Manager]

That is very interesting reading. Do you by any chance have first in Essex and First in East Anglia Norwich and Ipswich please.

 

[overthewater]

That is very interesting reading. Do you by any chance have first in Essex and First in East Anglia Norwich and Ipswich please.

First Essex

Turnover...£51,828,000
Cost.........£49,194,000
Profit........£1,9570,00 again some tax thing again.


First Eastern Counties:
Turnover...£33,697,000
Cost.........£33,072,000
Profit........£420,000 again some tax thing again.

No idea what Ipswich operations come under.

 

[Mr Manager]

Thank You First Ipswich comes under First eastern Counties.Not been separated as they said they would.

 

[Robertj21a]

Thank You First Ipswich comes under First eastern Counties.Not been separated as they said they would.

Probably didn't like to show a loss (on one or the other) - so decided to put them back together ! (still a poor return though).

 

[overthewater]

Four compaines in the UK bus empire are in dire need of improvements yet all four are in different operational areas IE one is big city another is small town etc. So its clear its local factors at play.

 

[F Great Eastern]

First Aircoach:
http://www.independent.ie/business/...-fast-lane-at-aircoach-operator-34405596.html

Although the money they owe to fellow group companies due in the next 12 months has increased a lot from the same figure in the previous accounts.

 

[Sandy Drew]

If you're going to quote financials OTW, you should be consistent and stick to 'operating profit' (income less operating expenses). Some of your numbers are a little 'apples and oranges' for comparison purposes!

As a side note, for all the First bashing, there are still some solid and consistent performers within First bus - Aberdeen, Leicester, Cymru, Essex, Bristol, Glasgow and (despite a dip) West Yorkshire.

 

[overthewater]

If you're going to quote financials OTW, you should be consistent and stick to 'operating profit' (income less operating expenses). Some of your numbers are a little 'apples and oranges' for comparison purposes!.

I used to use the snipping tool to take a actually copy of the accounts but a few nay Sayers on here complained about that. When you do look at 'operating profit' it confusing when you take away or add in other costs like asset sales etc I might just go back to the snipping tool.

If anyone want to look at the accounts just look here:
https://beta.companieshouse.gov.uk/

Just remember it has to the operating company name not sub;

As a side note, for all the First bashing, there are still some solid and consistent performers within First bus - Aberdeen, Leicester, Cymru, Essex, Bristol, Glasgow and (despite a dip) West Yorkshire.

Thats very true, but with any company your only as strong as your weakest link. As I said in the other thread, we need another strong second place big bus company to keep standards high. If places like Somerset and Glasgow have been turned around surly Manchester and Stoke can also archive this?

Its not good having these four areas losing money or making next to none, its been 5 years now ( where has the time gone) what else could be done.

 

[Blackpudding]

Probably didn't like to show a loss (on one or the other) - so decided to put them back together ! (still a poor return though).

Poor return on what? As far as I know aren't Ipswich and Norwich part of the same company - Eastern Counties and if so apart from internal use their is no requirement for them to show separate accounts for each depot.

 

[winston270twm]

If you're going to quote financials OTW, you should be consistent and stick to 'operating profit' (income less operating expenses). Some of your numbers are a little 'apples and oranges' for comparison purposes!

Operating profit doesn't take in to account all costs, pre-tax profits are the most commonly used for analysis & comparison

 

[Robertj21a]

Poor return on what? As far as I know aren't Ipswich and Norwich part of the same company - Eastern Counties and if so apart from internal use their is no requirement for them to show separate accounts for each depot.

The figures quoted were £420k on a turnover of £33.7m. In my view that's a poor return.

 

[Blackpudding]

The figures quoted were £420k on a turnover of £33.7m. In my view that's a poor return.

No the quote was '£420,000 again some tax thing again'.

It doesn't say whether the tax issue was positive or negative and I haven't seen the figures so don't know the answer to that.

It also fails to say what if any exceptional items are included again either positive or negative.

My point is I don't see how you can arrive at an informed opinion that it's a poor return without access to the full data.

 

[winston270twm]

The figures quoted were £420k on a turnover of £33.7m. In my view that's a poor return.

I second that! A 1.25% profit margin is very poor
--- old post above --- --- new post below ---

No the quote was '£420,000 again some tax thing again'.

It doesn't say whether the tax issue was positive or negative and I haven't seen the figures so don't know the answer to that.

It also fails to say what if any exceptional items are included again either positive or negative.

My point is I don't see how you can arrive at an informed opinion that it's a poor return without access to the full data.

Even the operating profit was only £625k (1.85%) which is poor and excludes any finance costs

 

[Blackpudding]

I second that! A 1.25% profit margin is very poor
--- old post above --- --- new post below ---


Even the operating profit was only £625k (1.85%) which is poor and excludes any finance costs

Thanks for a bit more detail. What is the average profit margin for the industry then I will have a benchmark (of sorts)?

 

[Sandy Drew]

Operating profit doesn't take in to account all costs, pre-tax profits are the most commonly used for analysis & comparison

No Winston, operating profit is used for profitability comparison.

 

[winston270twm]

Thanks for a bit more detail. What is the average profit margin for the industry then I will have a benchmark (of sorts)?

Based on latest annual accounts:

Rotala Group has a operating profit margin of approx 6.9%

NXWM has operating profit of approx 12%

First Group were aiming for double digit margins in the medium term approx 2-3 years ago ie 10%, so those figures of 1.85% are some way off

Operating profit excludes finance costs, for Rotala in particular their pretax profit margin falls to 3.6% due to borrowing costs

 

[overthewater]

No Winston, operating profit is used for profitability comparison.

Just to check is it the first figure or the second figure. I know it can make big difference.

 

[winston270twm]

No Winston, operating profit is used for profitability comparison.

Operating profit is not the actual final profit figure that has been earnt, as it excludes finance costs for any debt.

Pre-tax profits are those most commonly quoted in results announcements

 

[Sandy Drew]

Operating profit is not the actual final profit figure that has been earnt, as it excludes finance costs for any debt.

Pre-tax profits are those most commonly quoted in results announcements

Aware of that.

if you want to compare apples with apples, operating profit is what to look at (income less operating costs before interest and tax)

 

[Blackpudding]

Operating profit is not the actual final profit figure that has been earnt, as it excludes finance costs for any debt.

Pre-tax profits are those most commonly quoted in results announcements

I suppose when comparisons are made it vey much depends on your viewpoint.
If you were a management accountant you would focus on operating profit/loss, whereas if you were a financial accountant you would focus on profit after finance costs.
For what it's worth I agree with Sandy in that in my experience operating profit is the much more stable figure to compare like on like. It's a personal choice though - just so long as when comparisons are made everyone's talking the same figures.

Thanks for the industry figures by the way although I suspect these days an operating profit of 12% is the stuff of dreams for most companies.

 

[winston270twm]

Aware of that.

if you want to compare apples with apples, operating profit is what to look at (income less operating costs before interest and tax)

Regardless whether you're comparing operating profit or pre-tax profit in the example quoted both are very poor!

In the case of First Group pre-tax is the most important, as it is the finance costs & ultimately debt that is strangling the group
--- old post above --- --- new post below ---

Thanks for the industry figures by the way although I suspect these days an operating profit of 12% is the stuff of dreams for most companies.

12% isn't even the stuff of dreams are made of, 20-25% margins were the top of the industry league tables, although those kind of margins were few and far between. Even NXWM back in WMT days used to make those kind of margins in the 1990's.

 

[Sandy Drew]

Regardless whether you're comparing operating profit or pre-tax profit in the example quoted both are very poor!

In the case of First Group pre-tax is the most important, as it is the finance costs & ultimately debt that is strangling the group
--- old post above --- --- new post below ---


12% isn't even the stuff of dreams are made of, 20-25% margins were the top of the industry league tables, although those kind of margins were few and far between. Even NXWM back in WMT days used to make those kind of margins in the 1990's.

This is becoming painful - can I suggest you go read First's published results then tell us that they don't quote in operating profit. As does everyone else!

 

[tbone]

There seems to be a huge focus on profit margins and I dare say that that's where First may be going wrong.

There's two ways to improve margins, increase turnover or decrease costs.

In the bus industry, increasing turnover involves increasing passenger numbers or increasing fares. Decreasing costs basically means worsening the offering. Two of those options will result in you losing customers.

A bus costs essentially the same to run with 1 person on board or 70, only fuel will increase and even then fractionally. It's the companies that focus on getting people onto the buses, such as the management team in Bristol that are having success, not those like the Potteries who are making cut backs.

The message to me is simple, focus on getting people on the buses and the profit margins will look after themselves.

 

[Robertj21a]

There seems to be a huge focus on profit margins and I dare say that that's where First may be going wrong.

There's two ways to improve margins, increase turnover or decrease costs.

In the bus industry, increasing turnover involves increasing passenger numbers or increasing fares. Decreasing costs basically means worsening the offering. Two of those options will result in you losing customers.

A bus costs essentially the same to run with 1 person on board or 70, only fuel will increase and even then fractionally. It's the companies that focus on getting people onto the buses, such as the management team in Bristol that are having success, not those like the Potteries who are making cut backs.

The message to me is simple, focus on getting people on the buses and the profit margins will look after themselves.

Interestingly, First Group has got itself into a bit of a pickle over many of these 'simple' issues. Although you're quite right in what you say, this is First Group that we're talking about (!). Because they had continued to increase fares year after year they had, not surprisingly, lost a lot of custom, so they took the unusual step (for them) of actually reducing fares to more acceptable levels and the passengers came back in significant numbers.

Of course other operators, notably Stagecoach, wouldn't have fallen into that pot in the first [sorry !] place.

 

[winston270twm]

This is becoming painful - can I suggest you go
read First's published results then tell us that they don't quote in operating profit. As does everyone else!

I've read it thank you!

I don't dispute that First Group quote their profit figures breakdowns for individual divisions further in the report as 'Operating Profit', however, looking at the Financial Highlights section on Pg 2 they quote all 3 i.e. operating/pre-tax & post tax. Can I also suggest that you go away & have a read through the following annual reports focusing particularly of Financial Headlines/Highlights in the opening pages. As it will then become apparent that not all transport groups quote their group headline profit figures all in the same format as you incorrectly state:

NX Group Annual Result Press Release:
http://nexgroup.blob.core.windows.net/media/2040/nex-2014-fy-results-release-final.pdf
http://nexgroup.blob.core.windows.net/media/2293/ar2014-full.pdf

Headline group profit figures are quoted in normalized & statutory (IFRS) formats both before tax

Rotala Group Latest Annual Report (2014 see Pg 05 - Financial Highlights)
http://www.rotalaplc.com/investor/AnnualReports_8.html

Group profits are quoted as profit before taxation
--- old post above --- --- new post below ---

There seems to be a huge focus on profit margins
and I dare say that that's where First may be going wrong.

There's two ways to improve margins, increase turnover or decrease costs.

In the bus industry, increasing turnover involves increasing passenger numbers or increasing fares. Decreasing costs basically means worsening the offering. Two of those options will result in you losing customers.

A bus costs essentially the same to run with 1 person on board or 70, only fuel will increase and even then fractionally. It's the companies that focus on getting people onto the buses, such as the management team in Bristol that are having success, not those like the Potteries who are making cut backs.

The message to me is simple, focus on getting people on the buses and the profit margins will look after themselves.

Does anyone know how much & how far in advance that First Group had previously hedged it's annual fuel requirements? As the falling cost of Crude Oil may start and have a positive impact on reducing costs and increasing Group Profit at some point going forward. That along with increasing passenger numbers on existing services should help accelerate group profits

 

[Baxenden Bank]

Does anyone know how much & how far in advance that First Group had previously hedged it's annual fuel requirements? As the falling cost of Crude Oil may start and have a positive impact on reducing costs and increasing Group Profit at some point going forward. That along with increasing passenger numbers on existing services should help accelerate group profits

Falling fuel costs means running a car becomes more affordable. People who turned to the bus (and rail, although the markets are different) as oil prices soared may well return to the car if fuel prices remain low.

When fuel prices soared, First were quick to increase their fares using the rise as justification, when fuel prices fell...... No difference there to many utility companies though.