First Group: General Discussion

[Volvodart]

Looking at the trading statement, Greyhound is in deep trouble with airline competition and, reading between the lines, no quick fix. The analyst presentation has a pat on the head for Bristol and the Southwest, but mentions Essex, Manchester and 'our Scotland businesses' as needing more 'action'.

Not really, he was just commenting on this week's and April's service changes respectively, Aberdeen being the Scottish one. There was reference to networks just before this part of the answer.

 

[Anthony ross]

These stupid service changes in Essex hasnth helped matters I don't think first in Essex are going to need quite a bit of help

 

[Robertj21a]

Looking at the trading statement, Greyhound is in deep trouble with airline competition and, reading between the lines, no quick fix. The analyst presentation has a pat on the head for Bristol and the Southwest, but mentions Essex, Manchester and 'our Scotland businesses' as needing more 'action'.

On the positive side, they are replacing some expensive debt with cheaper debt.

Having to constantly blame things like the weather ('in this quarter we had a bit of rain') and the timing of Easter doesn't make it look very healthy.

First Group have a bit of a reputation for feeble excuses that just tend to raise concerns for those who know to read between the lines. A bit of 'massaging' of the Accounts (new bus orders, increased depreciation arrangements, vague inter- company adjustments) also does little to inspire confidence.

 

[winston270twm]

I’d missed that too. Perhaps the markets are beginning to lose patience?

Interestingly, given what we were discussing about bonds the other week...

They are redeeming the £300m bond (8.125%) in favour of two bonds totalling £275m (yes, paying a chunk down!).

New percentage is a weighted average of 4.25% so saving FGP a tidy £14m p.a.

They're only paying off £25 million of their debt, not that significant on the grand scheme of things, plus it's costing FGP £11 million this year to switch the bonds, this is before the annual £14 million interest savings kick in .

On a more concerning note, the profitable US ops are now under pressure and the share price has now gone below the rights issue price of 85p

 

[TheGrandWazoo]

They're only paying off £25 million of their debt, not that significant on the grand scheme of things, plus it's costing FGP £11 million this year to switch the bonds, this is before the annual £14 million interest savings kick in .

On a more concerning note, the profitable US ops are now under pressure and the share price has now gone below the rights issue price of 85p

Hi Winston - I know that they are only paying a small bit down (it was tongue in cheek)

Their early redemption "fee" for the bonds does have a very quick payback and then it's YoY benefit (and not a bad interest rate considering what we were speculating on just a few weeks earlier).

You can only hope that the snow bomb in the US and the impact of the hurricane on Puerto Rico are one offs but, as you know, you can't keep blaming one offs. Perhaps that is the patience bit I mentioned. More importantly, the market cap is now just over £1bn though let's see if there'll be a bounce back in the next week?

Of course, UK Bus turned in some figures ironically

 

[winston270twm]

Hi Winston - I know that they are only paying a small bit down (it was tongue in cheek)

Their early redemption "fee" for the bonds does have a very quick payback and then it's YoY benefit (and not a bad interest rate considering what we were speculating on just a few weeks earlier).

You can only hope that the snow bomb in the US and the impact of the hurricane on Puerto Rico are one offs but, as you know, you can't keep blaming one offs. Perhaps that is the patience bit I mentioned. More importantly, the market cap is now just over £1bn though let's see if there'll be a bounce back in the next week?

Of course, UK Bus turned in some figures ironically

Just checking your tongue hadn't got stuck TGW......

I agree the new interest rates they've managed to secure and very favourable (better than I was expecting), as is the £14 million in annual interest savings

There have been numerous weather related issues reported to have affected the figures from over the pond over the past few years, maybe they should start making an allowance for them, rather than having to keep telling the market that figures will be below expectations because of X, Y & Z.

I'm not sure the share price will bounce back at present, it needs some positive news to drive it + plus the wider markets are generally lower at present

 

[Robertj21a]

Just checking your tongue hadn't got stuck TGW......

I agree the new interest rates they've managed to secure and very favourable (better than I was expecting), as is the £14 million in annual interest savings

There have been numerous weather related issues reported to have affected the figures from over the pond over the past few years, maybe they should start making an allowance for them, rather than having to keep telling the market that figures will be below expectations because of X, Y & Z.

I'm not sure the share price will bounce back at present, it needs some positive news to drive it + plus the wider markets are generally lower at present

Interesting that there's been no public outcry from Pension Funds/large investors yet.

 

[Jordan Adam]

Will the 20 stay every 30mins?

It has been mentioned elsewhere that the 20 will remain half hourly with a PVR of 4. A 5th bus will join in the morning peak to allow extra running time around the busy Market Street area. This returns the level of frequency back to pre April 2017 for Dubford residents. Although peak time frequency is being slashed.

It has also been mentioned that the 8 will now serve Balgownie but will sadly remain hourly, rather unfortunate as the 8/9 have seen mass growth in the past 6 months. Personally i think getting rid of the 9 is a rather daft thing to do if they are not going to increase the 8 to Half hourly. I do wonder when and where their passenger numbers are from....

The 108 that was rumoured to be a Saturday variation of the 8 appears to be just a rumour.

In addition the 8A is going to just be a peak time service, in fairness when the 4 took that route it wasn't all that busy during the off peak period. Although go back to pre 2010 it was a busy route through the service 5 on a 15 minute frequency, Although plagued with unreliability due to tight running time.

I do sometimes wonder if the network team know the local area, where people want to go and how busy buses actually are...

 

[overthewater]

Remember there is no longer network team in the aberdeen is there? and its all controlled scotland wide now isnt it?

With the bigger picture could we see the private equity firms start sniffing around first again? Maybe that man will come back form last time with his ideas?

 

[Volvodart]

With the bigger picture could we see the private equity firms start sniffing around first again? Maybe that man will come back form last time with his ideas?

I wonder if anyone is counting how many times this has been mentioned on here before? It does not make it any more true.

 

[TheGrandWazoo]

I wonder if anyone is counting how many times this has been mentioned on here before? It does not make it any more true.

Keep firing the shotgun!!! You’ll hit something eventually

 

[overthewater]

What about Sandell Asset Management, a hedge fund?

Hedge fund boss Tom Sandell argued that selling off the American assets would deliver "a 50% upside to shareholders" and allow FirstGroup to shake off its "historic poor performance" by focusing on its UK bus and rail business.

 

[Jordan Adam]

Remember there is no longer network team in the aberdeen is there? and its all controlled scotland wide now isnt it?

I may be wrong but i'm pretty sure Aberdeen still has a network and marketing team based here, although the very very very (one more time) very useful social media team are based in Essex. Regardless i still wonder if they have a clue what they're doing.

Not sure why Aberdeen is having to take a brunt of the cuts anyway as it's a good performer for First and was only down in the year up to March 2017 due to the Oil downturn (Stagecoach had similar results too).

God help us come September as currently most days they only just about have enough buses to cover the PVR and the full 1/1A timetable isn't even on just now (Even though this time last year it would have been). Capacity issues on the 1/1A/2 seem to get worse year on year! There was rumour that the York Citaro Gs would be coming up here over the summer for when the September timetable comes in to full force and First have said that for the next "university year" they will be improving the service to RGU. But i'll have to see it to believe it!

Regardless it's going to be a very interesting time for us Enthusiasts local to the area. That being said when is it not!

 

[winston270twm]

Interesting that there's been no public outcry from Pension Funds/large investors yet.

I can't see them being patient for much longer, it's continual bad news & excuses and no prospect of things improving anytime soon.

Extracts from below article:

Analysts said that yesterday’s share price slide was more about what the company was not telling investors about its UK rail operations, including the two new franchises it has taken over in the last two years, Trans Pennine Express between Leeds and Manchester and South Western Railway in and out of London Waterloo.

The company said that like-for-like British rail revenues had been up 3.2 per cent in the last year. Much of the rail business concerns Great Western Railway in and out of London Paddington.

However, it is understood that the group has to deliver much higher growth than 3.2 per cent at its newer operations if it is to meets financial promises made to the Treasury in its winning bids for the franchises.

It promised to pay £313 million in excess profits from the Pennine service, which analysts reckon means it has to increase passenger numbers and revenues by between 13 per cent and 18 per cent a year. While the operator argues that new trains due next year will lift incapacity, revenue growth is reckoned to be running at 9 per cent.

After the Department for Transport was forced to bail out Stagecoach over its admission that its Virgin Trains East Coast train company could not keep up with its Treasury payments, there has been industry speculation that Trans Pennine Express could be the next, especially as First Group offered eight times more for the franchise than the next best bid.

https://www.thetimes.co.uk/article/franchise-fears-lurk-in-first-groups-hard-winter-wgb7nx0rz

 

[overthewater]

I may be wrong but i'm pretty sure Aberdeen still has a network and marketing team based here, although the very very very (one more time) very useful social media team are based in Essex. Regardless i still wonder if they have a clue what they're doing.

Not sure why Aberdeen is having to take a brunt of the cuts anyway as it's a good performer for First and was only down in the year up to March 2017 due to the Oil downturn (Stagecoach had similar results too).

It's not just Aberdeen, FSE has had to take cuts aswell there still; I believe looking for a new Marketing manager team for the whole of scotland.

 

[winston270twm]

What about Sandell Asset Management, a hedge fund?

Yes, they were the Hedge Fund pushing to split First Group up back in 2013, they have since reduced their stake (completely?) & moved on.

Current major shareholders list:
http://www.4-traders.com/FIRSTGROUP-4001947/company/

On the plus side, only 0.81% of FGP is currently being shorted:
https://shorttracker.co.uk/company/GB0003452173/

 

[Jordan Adam]

It's not just Aberdeen, FSE has had to take cuts aswell there still; I believe looking for a new Marketing manager team for the whole of scotland.

I think cutting and then fully axing the Lime Green Line 5 between 2010 and 2012 was one of the biggest mistakes they've made and i'm fairly sure they regret it too. The new 8A pretty much follows the route of the 5 from Dubford to ARI. On it's final week of operation a 5 from ARI heading for Dubford at around 20:00 had well over 20 people on it. Yet the same time a week later on the 4 that replaced it the number was closer to 5 people (no pun).

Whether it was a case or not to me it feels like Laird mucked up the network and then ditched the boat although that's just me personal opinion. So many routes that were before the August 2017 changes very reliable now struggle to run within 5 minutes of the timetable, frequencies have been all over the place (Strange 5/10 minute frequency offpeak on the 16/17 when it used to be a 7/8 minute frequency, Exact same on the full length 1/2 runs with the weird 5/10 minute frequency). The 23 was Every 9 minutes for a while before going back to Every 7/8 minutes (Not that anyone would know thanks to "at frequent intervals" being shown in the timetable!).

Only 4 good things happened in 2017 in my opinion for First Aberdeen. 1: Diverting the route of the 18, 2: getting rid of the Presidents, 3: Refurbishment and repainting of the B10s & 4: the introduction of more smart payments.

Anyway let me exit rant mode :P

 

[TheGrandWazoo]

Yes, they were the Hedge Fund pushing to split First Group up back in 2013, they have since reduced their stake (completely?) & moved on.

Current major shareholders list:
http://www.4-traders.com/FIRSTGROUP-4001947/company/

On the plus side, only 0.81% of FGP is currently being shorted:
https://shorttracker.co.uk/company/GB0003452173/

SAM are “activist investors” aka carpet baggers. Don’t get what they want (I.e. a quick buck), they often move on!

 

[Dentonian]

Looking at the trading statement, Greyhound is in deep trouble with airline competition and, reading between the lines, no quick fix. The analyst presentation has a pat on the head for Bristol and the Southwest, but mentions Essex, Manchester and 'our Scotland businesses' as needing more 'action'.

On the positive side, they are replacing some expensive debt with cheaper debt.

Having to constantly blame things like the weather ('in this quarter we had a bit of rain') and the timing of Easter doesn't make it look very healthy.

I wonder what more "action" means in terms of Manchester in particular.................

 

[overthewater]

I wonder what more "action" means in terms of Manchester in particular.................

http://otp.investis.com/generic/regulatory-story.aspx?newsid=980041&cid=858

or different one?

 

[Dentonian]

http://otp.investis.com/generic/regulatory-story.aspx?newsid=980041&cid=858

or different one?

Sorry. All I can see is a general comment for "First Bus" about "like-for-like" passenger revenues increasing by 1.4%. I assume this refers to actual (not adjusted for fare increases) revenue per passenger throughout the UK.

 

[winston270twm]

SAM are “activist investors” aka carpet baggers. Don’t get what they want (I.e. a quick buck), they often move on!

Not in the case of FGP - It turns out SAM only reduced their stake to just under 3% & therefore don't now show up on any lists of major FGP shareholders. Having checked all the 'Holdings in Company RNS's since the following one, SAM still own 2.98% of FGP. The latest news could be a catalyst to push for a break up of the group again? They may also gain more support than last time around,

http://www.lse.co.uk/share-regulato...=uc3yvrhy&ArticleHeadline=Holdings_in_Company

 

[Robertj21a]

I wonder what more "action" means in terms of Manchester in particular.................

I've lost track of which depots they've still got. Certainly they put the restructuring costs re Bury down as a significant reason for the latest significant loss. If that's still not enough I assume they are investigating further cutbacks of depots, or at least any unprofitable routes.
It's possible that they could still gain from any new re-regulation under Andy Burnham, but there's little firm data to go on so far.

 

[TheGrandWazoo]

http://otp.investis.com/generic/regulatory-story.aspx?newsid=980041&cid=858

or different one?

That’s just the press release not the investor presentation.

 

[winston270twm]

I've lost track of which depots they've still got. Certainly they put the restructuring costs re Bury down as a significant reason for the latest significant loss. If that's still not enough I assume they are investigating further cutbacks of depots, or at least any unprofitable routes.
It's possible that they could still gain from any new re-regulation under Andy Burnham, but there's little firm data to go on so far.

First Manchester's cancellation of Bolton services 571/2 & 575 hasn't gone down very well with the locals:
http://www.theboltonnews.co.uk/news...ued_by_new_operator_after_First_cancellation/
http://www.theboltonnews.co.uk/news...__572__and_575_bus_routes_cancelled_by_First/

 

[TheGrandWazoo]

I've lost track of which depots they've still got. Certainly they put the restructuring costs re Bury down as a significant reason for the latest significant loss. If that's still not enough I assume they are investigating further cutbacks of depots, or at least any unprofitable routes.
It's possible that they could still gain from any new re-regulation under Andy Burnham, but there's little firm data to go on so far.

They have Oldham, Bolton, Manchester (Queens Road) and Rusholme.Of those, the latter is (I think) leased and appreciably smaller.

They are in the process of cutting some services like the 575 so more about trimming the network, I suspect.

 

[overthewater]

That’s just the press release not the investor presentation.

Do you happen to have a link, hopeful im not looking in the wrong place.

 

[TheGrandWazoo]

Do you happen to have a link, hopeful im not looking in the wrong place.

http://www.firstgroupplc.com/~/media/Files/F/Firstgroup-Plc/reports-and-presentations/Transcript/180221 FGP trading update transcript.pdf

And please, try not to leap to conclusions. It is a defined Q&A from someone and for people not wanting to discuss minutiae

 

[TheGrandWazoo]

Not in the case of FGP - It turns out SAM only reduced their stake to just under 3% & therefore don't now show up on any lists of major FGP shareholders. Having checked all the 'Holdings in Company RNS's since the following one, SAM still own 2.98% of FGP. The latest news could be a catalyst to push for a break up of the group again? They may also gain more support than last time around,

http://www.lse.co.uk/share-regulato...=uc3yvrhy&ArticleHeadline=Holdings_in_Company

They could - depends very much on what happens in May. How close to expected profits and likelihood of a dividend will be pivotal questions.

 

[Dentonian]

First Manchester's cancellation of Bolton services 571/2 & 575 hasn't gone down very well with the locals:
http://www.theboltonnews.co.uk/news...ued_by_new_operator_after_First_cancellation/
http://www.theboltonnews.co.uk/news...__572__and_575_bus_routes_cancelled_by_First/

Neither has the 88 in North Manchester. 468 Bury-Rochdale isn't such a problem as Transdev Rosso already compete and have immediately got support to boost their service. New (or newer) buses are also due.