First Group: General Discussion

[Robertj21a]

GWR profits currently going First Groups way...



https://www.thetimes.co.uk/article/firstgroup-nets-40m-from-ailing-rail-line-7807zxhtv

That should help them fudge this week's figures.

 

[winston270twm]

That should help them fudge this week's figures.

Suggests GWR is propping up the rest of the Rail Division's poor performance. Have to see what Tuesdays announcement brings, I think I'll fall off my chair if any large disposal or value creation is announced with the Half Year results....

 

[TheGrandWazoo]

Suggests GWR is propping up the rest of the Rail Division's poor performance. Have to see what Tuesdays announcement brings, I think I'll fall off my chair if any large disposal or value creation is announced with the Half Year results....

Why would they be fudging things, or that Rail is doing worse than envisaged?

 

[winston270twm]

Why would they be fudging things, or that Rail is doing worse than envisaged?

Extract from said article:

'Profits from GWR have helped make up for weakness in the rest of its rail business.'

 

[TheGrandWazoo]

Extract from said article:

'Profits from GWR have helped make up for weakness in the rest of its rail business.'

Yeah but is that just opinion of the reporter?

After all, they’ve already put aside cash for TPE for the term of the franchise.

 

[Robertj21a]

Why would they be fudging things, or that Rail is doing worse than envisaged?

Most of First's recent annual reports have had a fair amount of fudging so as to create a smokescreen over their poorer performances.

 

[TheGrandWazoo]

Most of First's recent annual reports have had a fair amount of fudging so as to create a smokescreen over their poorer performances.

Not last time. Both the TPE provision and the asset write down and with Tim gone.....

 

[Towielad]

I think the best description is “basket case” the whole business is in dire straits the bus business in the main continues to limp along and the train franchises well...... Hull trains is running a third of its timetable and the American arm just goes from bad worse.

They just don’t seem to have the management ability to inject solutions that actually work.

 

[overthewater]

When will it go pop? What will break the camels back? What will make the shareholders finally snap? its now nearly seven years and as there say, its gone on far to long, but I just dont see an end to it.

 

[F Great Eastern]

Half year results in the morning.

 

[Andyh82]

When will it go pop? What will break the camels back? What will make the shareholders finally snap? its now nearly seven years and as there say, its gone on far to long, but I just dont see an end to it.

What are people suggesting will actually happen?

 

[Volvodart]

One of FirstGroup Plc’s largest investors called for the bus and rail operator to implement measures to improve its performance, including reinstating a dividend and splitting its U.K. and North American assets.

https://www.bloomberg.com/news/arti...vestor-calls-for-split-of-u-k-transport-group

FirstGroup Investor Calls for Split of U.K. Transport Group
By Scott Deveau
12 November 2018, 13:01 GMT Updated on 12 November 2018, 15:05 GMT
Coast Capital calling for replacement of majority of board
Company says it will update market on its plans Tuesday

One of FirstGroup Plc’s largest investors called for the bus and rail operator to implement measures to improve its performance, including reinstating a dividend and splitting its U.K. and North American assets.

“FirstGroup in its current guise is designed for failure -- your 10 years of extraordinary underperformance are proof enough of that,” James Rasteh, founder of Coast Capital, wrote in a letter to the company’s chairman.


Coast Capital, which says it is a top five holder in the Aberdeen, Scotland-based company, also wants FirstGroup to replace the majority of its board, consult shareholders on hiring a new chief executive officer and other managers and launch a sale-and-leaseback on at least some operating assets in its student bus business.

“We have collectively compromised too much, for too long, to now settle for half-way solutions,” Rasteh wrote in the letter dated Nov. 6, while also claiming that other investors have the same opinion.

A representative for FirstGroup said the company would update the market on its performance and future plans when it delivers half-year results Tuesday.

Shares in FirstGroup have fallen about 27 percent this year amid poorly performing U.K rail lines and increased competition from low-cost carriers. The company, which operates brands including Greyhound buses, First Rail and First Student, kicked off a review of its operations in May after CEO Tim O’Toole resigned.

Wolfhart Hauser, FirstGroup’s chairman, said at the time the company remains open to takeover bids despite rejecting an offer from Apollo Global Management LLC. FirstGroup, which has a market valuation of about 982 million pounds ($1.3 billion), also attracted interest from buyout firms including CVC Capital Partners, people familiar with the matter said in September.

Coast Capital has consulted “every CEO in the industry” as well as severally former FirstGroup managers in devising its proposals for the company, according to the letter. It has also submitted the names of potential director nominees, none of whom have been contacted by the company, Rasteh said.

It’s not the first time FirstGroup has been targeted by an activist who wanted to split the company. Sandell Asset Management ran an unsuccessful campaign to break up the company in 2013.

Coast Capital is also waging an activist campaign at Canadian miner Detour Gold Corp., where it has urged the company to explore a sale.

(Updates with company comment in fifth paragraph.)

 

[winston270twm]

One of FirstGroup Plc’s largest investors called for the bus and rail operator to implement measures to improve its performance, including reinstating a dividend and splitting its U.K. and North American assets.

https://www.bloomberg.com/news/arti...vestor-calls-for-split-of-u-k-transport-group

It's the same source as the FT article from 9th Nov (Coast Capital Management). I wonder if the update of 'Future Plans' by the FirstGroup representative will amount to much...

 

[TheGrandWazoo]

Results out - not much fudging. Bad for Greyhound with lots of one offs. UK Bus looking better. Confirmed 260 new vehicles for 2018/9. Like for like volumes up.

 

[InspectorBloke]

Matthew Gregory has been announced as the Chief Executive, he was previously Chief Financial Officer. Wolfhart Hauser has reverted back to Executive Chairman.

 

[overthewater]

Matthew Gregory has been announced as the Chief Executive, he was previously Chief Financial Officer. Wolfhart Hauser has reverted back to Executive Chairman.

chairs on the titanic

 

[Whiteway215]

chairs on the titanic

Iceberg ahead?????!!!!!

 

[TheGrandWazoo]

Iceberg ahead?????!!!!!

Hmmm - good question.

What does OTW know that hasn't been disclosed?

 

[DragonEast]

Looks to me more like treading water. A continuing hand-to-mouth existence at the shop floor (as for the last 5 years). Or like their passengers, waiting for something to turn up, they just don't know what, or when. The C21 muddle-and-go-nowhere. Try to make sense of anything from First, and at best we seem to go round in circles, or more likely give up. It's not inspiring, is it? It'd test the loyalty of the most ardent fan, and apart from on here are there many of those, out there?

They always appear to me like a business in receivership, just keeping their heads above water - and waiting, for what I'm not sure. They've bought themselves another 12 months. Hardly inspiring or comforting. No vision for the future of the business - it's all about mechanics, and short term. Contactless can bring passengers on board, and the App gives them information but it doesn't mean it's of any use or guarantee you'll retain them, or do you just lose them again? Who's driving the bus, at the management level? Their software provider? Congestion is a big threat, so what, what's their strategy to deal with it (or anything else for that matter)? If their biggest news is closing Clacton and Rusholme: doesn't it speak for itself? Trouble is that I'm not sure no news is good news. Though probably in First's case . . . A drowning man I suppose will clutch at straws, and mutter the same incantations endlessly. No iceberg necessary.

 

[DragonEast]

Looking at it from the narrow perspective of First Bus, as a example, as I suspect it's Company-wide: we boast of our number of buses (size) as we have for the last 5 years and continue to do so - without the resources. Result: firefighting, constantly. Who thought that was an attractive business proposition and, perhaps more importantly, continues to think so?

I know the reason, by the way, they don't have any alternative. Doesn't that say it all?

 

[TheGrandWazoo]

Looks to me more like treading water. A continuing hand-to-mouth existence at the shop floor (as for the last 5 years). Or like their passengers, waiting for something to turn up, they just don't know what, or when. The C21 muddle-and-go-nowhere. Try to make sense of anything from First, and at best we seem to go round in circles, or more likely give up. It's not inspiring, is it? It'd test the loyalty of the most ardent fan, and apart from on here are there many of those, out there?

They always appear to me like a business in receivership, just keeping their heads above water - and waiting, for what I'm not sure. They've bought themselves another 12 months. Hardly inspiring or comforting. No vision for the future of the business - it's all about mechanics, and short term. Contactless can bring passengers on board, and the App gives them information but it doesn't mean it's of any use or guarantee you'll retain them, or do you just lose them again? Who's driving the bus, at the management level? Their software provider? Congestion is a big threat, so what, what's their strategy to deal with it (or anything else for that matter)? If their biggest news is closing Clacton and Rusholme: doesn't it speak for itself? Trouble is that I'm not sure no news is good news. Though probably in First's case . . . A drowning man I suppose will clutch at straws, and mutter the same incantations endlessly. No iceberg necessary.

Not certain you've read the figures properly? Or just picking out the bits that support your usual narrative?

"They always appear to me like a business in receivership, just keeping their heads above water" - you should check out the liquidity and cashflow figures. In fact, they now have a better cash flow because of the SWR franchise though, of course, that is lower margin business. I might also add that whilst you may believe that First Group have bought another year, that's handy as next year, another lump of very expensive Moir era debt falls off so they'll be able to get a better deal on that! Not withstanding the fact that group debt has dropped further - did you miss all of those figures?

In terms of UK Bus, the revenue is up by £5m but the operating profit is up by £9m. That's partly because they've been screwing down the costs. Comparing with the previous year, they have had the pain of the one offs for closing the two Manc depots and Rotherham but those revised cost bases together with improved revenue capture (basically, less fiddling by drivers) is feeding through. Of course, there are other issues like the reduced new vehicle intake (only 180 vehicles of which a number are on lease rather than capital spend) though increasing in 2018/9 to 260. Then there are like for like increases in passenger volumes of 0.7% - quite modest but compare with the industry?

Congestion is their biggest enemy and they say, clearly, that they will invest where LA stakeholders will work with them to tackle this. Put another way - if an LA isn't playing ball (take somewhere like Somerset), what do you expect them to do? Invest in levitating buses that can avoid road congestion in Taunton? Build their own bus lanes? I'd question why they'd be putting much more operational strategy detail in their half year update???

If you want to beat First Group with a stick, the absence of anything reflecting the clamour to divest from activist investors is the most obvious gap. As a shareholder, these are nothing much more than a solid set of results. Nothing transformational but heading the right way though very slowly - debt is coming down, the pension deficit cut, though no sign of a dividend or fundamental value creation. As has been said before, whether that's enough to appease investors whose patience has been sorely tried, I would doubt.

 

[overthewater]

ALL i said was " chairs on the titanic" ie all I have seen is there have moved some Executive around, what is that going to do?

 

[TheGrandWazoo]

ALL i said was " chairs on the titanic" ie all I have seen is there have moved some Executive around, what is that going to do?

Which individuals would you sack and why?

 

[overthewater]

Which individuals would you sack and why?

If I was a shareholder I would sack the lot of them. I dont see what there have done to improve things, its the guys underneath at First bus that are doing the great work.

 

[TheGrandWazoo]

If I was a shareholder I would sack the lot of them. I dont see what there have done to improve things, its the guys underneath at First bus that are doing the great work.

So you'd sack the new CEO, Wolfgang Hauser? Who else?

Giles, James Freeman, Nigel Eggleton, Dave Alexander, Andrew Jarvis??

 

[overthewater]

Yes, he was previously Chief Financial Officer, So part of the current mest... I wouldn't sack any of this lot James Freeman, Nigel Eggleton, Dave Alexander, Andrew Jarvis, Giles is debatable since he had 8 years?

 

[TheGrandWazoo]

Yes, he was previously Chief Financial Officer, So part of the current mest... I wouldn't sack any of this lot James Freeman, Nigel Eggleton, Dave Alexander, Andrew Jarvis, Giles is debatable since he had 8 years?

The new CEO was the CFO who has helped get the millstone of debt down from £1.4bn to just over £1bn since 2016 - I'd not be sacking him. Also, he wasn't in situ when TPE was agreed and signed off nor was he fundamental in defining the strategy. ToT took the bullet (rightly) and don't know how the US bosses compare.

As for Giles, it's taken time (and you have to question how much latitude he had to jettison the poor operations and incur goodwill losses) but UK Bus is returning some better figures. However, they're still too low for the industry and they will still be lumpy. Part of that is industry/economy related - even Go Ahead are suffering in the bleak North whilst profiting in the South. Nonetheless, there are some operations that just do not have the same attention as others - local leadership lacking??

 

[winston270twm]

I don't think the major investors will be that happy with today's results, yes FGP now has a permanent CEO, UK bus has improved profit margins. as had Student & Transit, but those gains in the US have then been wiped out by a fall in profits at Greyhound, the wording of the announcement, clearly suggests that Greyhound is being retained with improvements planned.

Plus a couple of extracts from press reports on the back of today's FGP Half Year results:

'FirstGroup has warned a new £200m pension hole has opened up on its balance sheet, delivering a fresh blow to investors hoping the struggling bus and rail operator will be broken up'

'The new boss of FirstGroup has pledged to bid for more UK rail operations – despite the beleaguered transport group warning that profits in its existing rail business were in jeopardy'

 

[johnw]

But what has Giles Fearnley done to improve First Bus? It would appear that the individual managers at Bristol, South West, Leicester and Norwich have achieved this - with the help of Best Impressions.

 

[Volvodart]

Plus a couple of extracts from press reports on the back of today's FGP Half Year results:

'FirstGroup has warned a new £200m pension hole has opened up on its balance sheet, delivering a fresh blow to investors hoping the struggling bus and rail operator will be broken up'

Not much appears to have changed with the pension deficit. It was always known that the liability was larger than it appears in the accounts, as it had been discounted as it is not due to be eliminated until 2029. I guess Firstgroup wanted to highlight the additional liability that would arise if First UK Bus was sold. I cannot see that figure being disclosed before in such a manner, so I do not know how it compares with previously.