First Group: General Discussion

[tbone]

Could York be making a loss because they paid too much to retain the Park and Ride contract? If so, could it get worse when more recent accounts are factored in after they probably did the same to gain the uni contract?

Alternatively, First York a couple of years ago became part of SY rather than WY as they were traditionally. Could some SY overheads have been disproportionately been allocated to York to reduce losses at SY?

The University contract will probably be a real drain for York. Transdev ran a less frequent service with a not insignificant subsidy. Seemingly so as to get rid of the Transdev competition, they out a bid in to run all the University services (including the free UB1 service) for no subsidy. They were perhaps hoping that Transdev would admit defeat and disappear.

Instead they've improved Unibus by offering better spec'd bhses, albeit at a slightly lower frequency, and are providing stronger competition than when Transdev were the university provider. First are also being portrayed as a pantomime baddy due to poor performance on the route so far.

 

[DunsBus]

Knew you'd know. I know that the tender was based on new vehicles but I still maintain that it was overkill to have that spec. Arguably, it was overkill for Midland Bluebird!!

Up until then, it was only the Grampian fleet which got new vehicles to the Advance SE spec as Midland Bluebird had received a similar batch of Scania/Wrights in 1994 which lacked the double-glazing and aircon. The 10 Scanias new in 1995 (eight for Midland Bluebird and the pair diverted to Lowland) along with 10 Prismas delivered the same year to Leicester Citybus were the only fleets other than Grampian to have vehicles to Advance SE spec.

Incidentally I see that First Scotland East (the PM923 part) have been invited to tea and biscuits with Auntie Joan in the next few weeks...

 

[overthewater]

Incidentally I see that First Scotland East (the PM923 part) have been invited to tea and biscuits with Auntie Joan in the next few weeks...

Which depot is in trouble Livingston or Muss? I can't see it being for regarding maintenance since Livingston had alot of new buses, while Muss has been given alot of newer cast offs? I cant see it being for time keeping around Livingston, since alot of the routes have lots of spare time.
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Looks like there already been:

Section 5.2 – Decisions Taken at Public Inquiries
Public Inquiry (51296) held at Level 6, The Stamp Office, 10 Waterloo Place, Edinburgh, EH1
3EG on 09 February 2016 at 10:00(Previous Publication2051)
PM0000923 SI
FIRST SCOTLAND EAST LTD
Director(s): JOHN FINNIGAN GORMAN, JOHN LYALL, DAVID BRIAN ALEXANDER, JOHN
PAUL MCGOWAN.
ARMUIRS HOUSE, 300 STIRLING ROAD , LARBERT FK5 3NJ
PSV S17 Formal warning in respect of roadworthiness and punctuality.
PSV S39 Determination made to impose a penalty of £30,000 under Section 39
[Transport (Scotland) Act 2001].

 

[Surreyman]

Which depot is in trouble Livingston or Muss? I can't see it being for regarding maintenance since Livingston had alot of new buses, while Muss has been given alot of newer cast offs? I cant see it being for time keeping around Livingston, since alot of the routes have lots of spare time.
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Looks like there already been:

Section 5.2 – Decisions Taken at Public Inquiries
Public Inquiry (51296) held at Level 6, The Stamp Office, 10 Waterloo Place, Edinburgh, EH1
3EG on 09 February 2016 at 10:00(Previous Publication2051)
PM0000923 SI
FIRST SCOTLAND EAST LTD
Director(s): JOHN FINNIGAN GORMAN, JOHN LYALL, DAVID BRIAN ALEXANDER, JOHN
PAUL MCGOWAN.
ARMUIRS HOUSE, 300 STIRLING ROAD , LARBERT FK5 3NJ
PSV S17 Formal warning in respect of roadworthiness and punctuality.
PSV S39 Determination made to impose a penalty of £30,000 under Section 39
[Transport (Scotland) Act 2001].

FSE, with just 2 depots & an outstation managed to lose £1.6M, in year to March 2015, so a £30,000 fine isn't going to help them reach 10%!!
(Doubtless someone on this forum, with more accounting knowledge than I, will explain that fines come out of a particular fund or budget and are not counted as 'Costs'!)

 

[ChrisPJ]

First must be wondering where the end of the tunnel is at Scotland east, seems like a right old toxic asset.

 

[overthewater]

Be grateful the year before it was 25%loses. I think there on track to break even?

 

[F Great Eastern]

I wouldn't place too much emphasis on the First Northern Ireland accounts.

The Aircoach operation in Ireland is Last Passive Ltd, which pretty much everything related to Aircoach is based on. There is a holding company above them called Aeroporto Limited which is non trading in itself and published abridged accounts.

However since some of the coaches that operate on the Dublin to Belfast route are based and registered in Northern Ireland and garaged there, and some of the drivers are based there, there has to be an NI company set-up to facilitate this.

Online Tickets for all routes inc Belfast are sold by Last Passive Ltd through Aircoach.ie. Last Passive Ltd then subcontract part of the Dublin-Belfast service to First Northern Ireland Ltd for a fee. Also some leasing and purchase agreements on behalf of the ROI company are done by the NI arm, who then leases or subleases the assets to the ROI arm.

It's a complicated arrangement, but basically the upshot is that the NI company is only there because it has to be for certain things and certain benefits and the ROI accounts give a better indication of the overall Aircoach performance.

However in the ROI accounts they use an exemption to not disclose transactions between fellow group companies which hides the various transactions between Last Passive Ltd, First Northern Ireland, and Firstbus (South) Limited.

If anyone wants a copy of the accounts let me know for the ROI arm.

 

[Surreyman]

I wouldn't place too much emphasis on the First Northern Ireland accounts.

The Aircoach operation in Ireland is Last Passive Ltd, which pretty much everything related to Aircoach is based on. There is a holding company above them called Aeroporto Limited which is non trading in itself and published abridged accounts.

However since some of the coaches that operate on the Dublin to Belfast route are based and registered in Northern Ireland and garaged there, and some of the drivers are based there, there has to be an NI company set-up to facilitate this.

Online Tickets for all routes inc Belfast are sold by Last Passive Ltd through Aircoach.ie. Last Passive Ltd then subcontract part of the Dublin-Belfast service to First Northern Ireland Ltd for a fee. Also some leasing and purchase agreements on behalf of the ROI company are done by the NI arm, who then leases or subleases the assets to the ROI arm.

It's a complicated arrangement, but basically the upshot is that the NI company is only there because it has to be for certain things and certain benefits and the ROI accounts give a better indication of the overall Aircoach performance.

However in the ROI accounts they use an exemption to not disclose transactions between fellow group companies which hides the various transactions between Last Passive Ltd, First Northern Ireland, and Firstbus (South) Limited.

If anyone wants a copy of the accounts let me know for the ROI arm.

Thanks for the info F Great Eastern.
If I understand your post correctly, Aircoach in ROI are doing very nicely profit wise.
For various legal/technical/practical reasons there has to be a separate registered operation in NI, which is apparently running at a loss, although this is to do with accounting niceties (Completely Legit').
I am vaguely aware that losses can be offset against future tax liabilities?
Just to make clear, this is not First Group 'bending the rules' any similar Transport group would do the same thing in the same circumstances.

 

[F Great Eastern]

Thanks for the info F Great Eastern.
If I understand your post correctly, Aircoach in ROI are doing very nicely profit wise.
For various legal/technical/practical reasons there has to be a separate registered operation in NI, which is apparently running at a loss, although this is to do with accounting niceties (Completely Legit').
I am vaguely aware that losses can be offset against future tax liabilities?
Just to make clear, this is not First Group 'bending the rules' any similar Transport group would do the same thing in the same circumstances.

After several years of loss making performance, some of them heavy they made what I believe is their biggest profit in their history in the last set of accounts that they had published and many people expected a better performance than the previous year, but the size of the turnaround was pretty surprising.

The creditors part of the accounts is quite interesting for example:

- Following the most recent accounts, the company had sums falling due in less than a year totaling over €12m to creditors, Including €10.5m to fellow group companies.

- In the previous accounts at the time of publication, the company had €6.9m owing to creditors, including €5.7m owing to fellow group companies over the 12 months following publication.

Right at the end of the accounts:
"The company has taken the exemption from disclosure of transactions and balances with fellow group companies in accordance with financial reporting standard no 8. Related party transactions."

 

[overthewater]

Big challenge for the Eire operations is waiting for the privatisation of the coach network, I wonder when it will happen. I dare say First will make a killing on the routes.

 

[F Great Eastern]

Within Dublin
You have to remember than Dublin Bus operates pretty much all bus services within Dublin apart from airport services and tours and gets subsidy for each one and only their tours and airport services operate on commercial basis. This is because commercial operators are not allowed to compete with state subsidised services.

Dublin Bus has it's fleet replacement programme funded by the exchequer and does not purchase it's own buses these days. This discourages private competition in ways because private operators would have to fund their own vehicles and run a competing service totally commercially, when Dublin Bus gets subsidy and vehicles.

There is the commercial Swords Express service however that has made in-roads into this, however this was only approved as a competing service since it took a very different route (through Dublin Port Tunnel) that Dublin Bus was not using at the time therefore it was not seen as direct competition.

The reason there is so many airport services is simply because Dublin Bus under-served the airport for a very long time and neglected it. This is something that other operators have exposed, with their own services that ran later and more regular and from more locations. However this is something Dublin Bus are now addressing.

Buses Within Other Towns and Cities
The local bus services in Town's and Cities outside Dublin are almost fully operated by Bus Eireann under that name. All services are subsidized and all vehicles are provided for by the state effectively as benefit in kind. Note that the cost of vehicles is not included in the subsidy figures.

There is some limited competition in some Towns. 3 routes in Galway, 2 routes in Limerick and 2 in Waterford and the odd one elsewhere. However these ones are often picking up small niches in the markets by local operators and tend not to be high frequency because of the nature of them filling in a small niche. Again Bus Eireann is protected from directly competing services.

The local bus services in Town's and cities outside Dublin and stage carriage / commuter services between Towns are operated by Bus Eireann under that name. All of these services are subsidized and none are operated on a commercial basis.

Commuter Services between Towns, Villages and Cities
Commuter services are 90% or so operated by Bus Eireann. All BE services are subsidized and all vehicles are provided for by the state effectively as benefit in kind. Note that the cost of vehicles is not included in the subsidy figures.

There are a few private commuter services, which for the most part tend to fill in gaps that are not offered by Bus Eireann, some of them are very successful whilst a good few of them tend to operate peak-time only because of the nature of these services, there would be more of these services than the services within Town's or cities though, but again mostly run by smaller operators.

Intercity Services
Traditionally up until around 10 years ago, almost all inter-city services were ran by Bus Eireann on a commercial basis and private operators found it very hard to get a foot in the market. Licenses were difficult to get and the state took in many case years to process applications

However since changes in licensing legislation, controlled competition has been allowed, generally two operators on each inter-city corridor service with each corridor divided into two types of service, multi-stop inter-city services and Express inter-city services, giving a total of four operators allowed between particular cities. If you do not get one of the licenses, you are effectively locked out of that corridor.

Lets take Dublin to Cork for example:
- Bus Eireann had the original Dublin to Cork multi-stop license from a long long time ago.
- Aircoach applied for one in 2003 and it was granted.
- Now both Multi-Stop licenses are gone, nobody can apply for one.
- Aircoach were granted Dublin to Cork non stop in 2011
- GoBus were granted Dublin to Cork non stop in 2012.

Because of that, Bus Eireann was knocked out of the Dublin to Cork Express market and there was no license to apply for. So in the end they teamed up with GoBus to operate GoBE as a joint venture, that is legally a GoBus service but co-branded.

The idea is the system rewards innovation and operators who take chances on new routes, without allowing rival operators who had no desire to operate that route who simply want to be pouncing on them a short while later just to run them off the road to protect their patch rather than actually wanting to run services.

Note that all vehicles operated by Bus Eireann on intercity services are branded as Expressway, and whilst Expressway shares staff and facilities with subsided commuter and Town services operated by Bus Eireann, vehicles have to be self-funded by Bus Eireann and the Expressway arm is not receiving any subsidy itself.

Latest Proposals.
What the latest proposals are is that 10% of the subsidy routes on the Dublin Bus and Bus Eireann network are to be offered out to tender in bundles to all operators, including the state operators.

These routes will be some local routes in Waterford, some commuter routes in counties surrounding Dublin and services in Dublin that do not serve the city centre in any form. it's likely to hear who will win the tenders in a few months, but Dublin Bus and Bus Eireann have been shortlisted but the rest of the shortlist has not been known.

Because of the way the system is regulated, it is very hard to get any one dominant commercial operator from the private sector. However there are rumours that Bus Eireann are worried about losing routes in the tendering and may subcontract some services to small privates who have a lower cost base than themselves in order to be competitive in tendering.

 

[90sWereBetter]

Does anyone know if there's a deadline for repainting everything out of Barbie and into some variation of the Olympia livery? I somewhat remember reading a 2012 edition of Buses magazine stating the relivery would be a four-year program.

Perhaps finally Yarmouth will repaint their Presidents, and likewise Colchester with their Scanias.

 

[THarris123]

Any news yet on the 2016 bus order?

 

[Andyh82]

Does anyone know if there's a deadline for repainting everything out of Barbie and into some variation of the Olympia livery? I somewhat remember reading a 2012 edition of Buses magazine stating the relivery would be a four-year program.

Perhaps finally Yarmouth will repaint their Presidents, and likewise Colchester with their Scanias.

In West Yorkshire, everything has been repainted except for the Olympians and a few ALX400s used on schools in Bradford.

 

[overthewater]

Any news yet on the 2016 bus order?

If its any thing like last year we're be waiting ages. Expect alot more deckers.

 

[Volvodart]

They are probably waiting until the green bus fund announcement that Bristol applied for is made, which I think is due this month.

 

[overthewater]

FirstGroup undertakings review for SB holdings

https://www.gov.uk/cma-cases/firstgroup-undertakings-review

Some interesting piece: Lets be fair how much is true and how much is just being said to keep the undertakings happy?

From Lothian statement

Lothian said it would expect FirstGroup to exit from a number of routes around Edinburgh if the undertakings were lifted. If that happened, Lothian would evaluate the opportunities to see if there was a business case or a long-term prospect of making the operation sustainable

16: Lothian did not think that the public had particularly benefited from the undertakings. Lothian said it struggled to actually find anyone who would have benefited.

17. Lothian did not think the undertakings should be varied (rather than lifted). Lothian thought it was a mistake for FirstGroup to have accepted the undertakings in the first place and it had constrained markets throughout Central Scotland and East Scotland.

SESTRAN

Falkirk Council said that it had heard, anecdotally, that FirstGroup was maintaining mileages in places where a normal operator would not maintain mileage because of the mileage floor. Falkirk Council speculated whether some of the (much increased) prices it was having to pay for tendered services was cross-subsidising maintaining that floor somewhere else in the region. East Lothian confirmed this, and when Fist Group was operating Scotrail this had a further impact on routes that could not be altered.

11. Falkirk Council said that zonal fares within the Falkirk operating area were based on the original fare zones that were locked down by the undertakings, meaning that the cost of journeys to settlements just outside the fare zones could be high. The boundaries had no relation to where the geographic pool of that settlement was located.


12. Falkirk Council said that it did not think that fares would increase markedly if the undertakings were removed because if FirstGroup were to increase fares, for example in Falkirk, it would lose the business. There was not the elasticity in the market in Falkirk for further substantial fare rises.

Mcgills

McGill’s told us it planned to start registering buses in Lanarkshire early in 2016 where it would compete with FirstGroup. There were two arteries in North Lanarkshire that ran up the main corridor that would put McGill’s in competition with FirstGroup, which was aware of McGill’s intentions in that area.

Stagecoach

Stagecoach entered in Queensferry against FirstGroup and it was not long until FirstGroup pulled out. Stagecoach told us that it was watching the whole central belt of Scotland and that if opportunities were to arise, it would take them.

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Big point from the undertaking? We're still NOT reached rock bottom/leaving out/ turned the corner with FSE.

You have to wonder what else could be cut especial within West Lothian or Forth valley area, it really is shocking its taken this long to final get everything sorted out.

The review should publish its conclusion within 4 weeks; I believe further consultation will take place with that before the final agreement in May.

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15 March 2016: The CMA has provisionally decided that undertakings given by FirstGroup plc, relating to the completed acquisition by FirstBus plc of SB Holdings Ltd in 1996, should be released.

https://www.gov.uk/cma-cases/firstgroup-undertakings-review

We still have another approx 6 weeks before it final.

The Competition and Markets Authority (CMA) announced in October that it would carry out a review of the undertakings given in relation to the completed acquisition by FirstBus plc of SB Holdings Ltd (SBH) in 1996. FirstBus changed its name to FirstGroup in 1997.

The undertakings limit the fares that FirstGroup can charge and require the company to maintain a minimum level of service in some areas. They also govern some aspects of how FirstGroup schedules its services.

In a provisional decision published today, the group of independent CMA panel members carrying out the review have found that the undertakings are no longer appropriate due to a change in circumstances.

Phil Evans, chair of the FirstGroup undertakings review group, said:

We have examined each of the initial concerns about the merger that ultimately led to the undertakings being imposed. We have provisionally found that the constraint that rival operators now place on FirstGroup is as great, if not greater, than the constraint that FirstBus and SBH placed on each other before the merger and think the undertakings should be lifted.

We recognise that if the undertakings are removed, FirstGroup might restructure some of its fares and routes. The undertakings artificially held prices down in some areas and required the maintenance of otherwise unprofitable routes. This both reduced the chances of a rival bus operator bringing in a competing service which could benefit passengers and made investment in better bus services uneconomic.

We place strong weight on the fact that in hearings there was universal agreement from competitors and public transport authorities that the undertakings were either having little effect or having harmful effects.

Further details, including the CMA’s summary of its provisional decision and notice of intention to release the undertakings, can be found on the case page.

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So did anyone actually read the report? I would be very surprised:

* 5.22
While we note that McGill’s does not currently have a depot in the First East area it told us that it would consider expansion there if it could recover costs. It also said it had been interested in purchasing the Dalkeith depot from FirstGroup; however, this did not materialise as I found out about the closure too late.

5.138 FirstGroup and third parties raised the issue of network withdrawal in First East. FirstGroup told us that it did not have a final plan in mind for what it would do in the First East area if the undertakings were removed. Nevertheless, it did not see wholesale fare increases; in fact, there might be
price decreases. There would inevitably be some route withdrawals but, these would be on routes with very few passengers. Overall, FirstGroup told us that it would seek to redeploy resources which could led to an increase in frequencies and/or stronger networks. []

( maybe the place where cuts are made could result in better services else where? )

* 5.140
Lothian Buses told us that it expected to see the exit from a number of routes in and round Edinburgh. It noted that the economies of scale were such that single routes were not going to support depot overheads. Lothian Buses expected that in a number of cases FirstGroup would exit the market entirely.

Did anyone else spot anything interesting from the report?
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What seems to be one of the first acts in connection to the undertaking is the new Falkirk Zonal ticket, which will Slash the cost for many many people.

http://www.firstgroup.com/south-east-and-central-scotland/more/save-falkirk


Is it next Friday when the next first group corporate briefing takes place?

 

[Robertj21a]

Why is it necessary to keep repeating most of the text ?

 

[overthewater]

Why is it necessary to keep repeating most of the text ?

Which text is repeated?

 

[Hophead]

Seems to be pretty much all of it

 

[overthewater]

I disagree its pretty much all of it, There does seem to be repeat one quote from lothian buses. That not all of it, mind you its taken well about a week before any has notice a minor repeat?

 

[Robertj21a]

I disagree its pretty much all of it, There does seem to be repeat one quote from lothian buses. That not all of it, mind you its taken well about a week before any has notice a minor repeat?

I kept hoping it would soon get sorted out !

 

[WatcherZero]

From a low of 80.25p five weeks ago First share price has gradually recovered and is holding around 94p, just over 10p down on last quarter.

 

[winston270twm]

From a low of 80.25p five weeks ago First share price has gradually recovered and is holding around 94p, just over 10p down on last quarter.

I'm sure all the people that participated in the FGP rights issue in June 2013 at 85p a share will be overjoyed with their 9p profit & no dividend over the past 3 years.....

 

[TheGrandWazoo]

I'm sure all the people that participated in the FGP rights issue in June 2013 at 85p a share will be overjoyed with their 9p profit & no dividend over the past 3 years.....

Yes Winston, I am. Mind you, I am a serial share jinxer!!!

 

[winston270twm]

Yes Winston, I am. Mind you, I am a serial share jinxer!!!

You're not the only one, the stock market doesn't favour PI's, it's hard to do any good these days. The shareprices have already moved in either direction before any announcement has been made public to the likes of us.....

 

[TheGrandWazoo]

You're not the only one, the stock market doesn't favour PI's, it's hard to do any good these days. The shareprices have already moved in either direction before any announcement has been made public to the likes of us.....

I regard it in the same regard as the dogs and horses!

 

[winston270twm]

I regard it in the same regard as the dogs and horses!

It never used to be like that, it was more about investing long term and over more than one race.... but it is like that now. Too much manipulation and PI's consistently lose out.

 

[overthewater]

You would think the price would be higher since First has just managed to hold on to Hull trains for another 13 years.

 

[Robertj21a]

You would think the price would be higher since First has just managed to hold on to Hull trains for another 13 years.

Absolute drop in the ocean when you look at the size of First Group (and the size of their financial problems).