I had to go and double check how "debt will be serviced" I believe it was: Company A takes out a bond for £100 at 10% for 10 years.. each year the company pays the bond holders £10, once the final year appear that when you pay off the original bond amount. IF you dont have the money to pay off that £100 then "as said above take out another bond" and hope for better financial luck next time. Thus your just wasting alot of money interest etc and going on a merry go round. Surly it would be madness to go for another unless you know when you'd be back on track financially enough to cover it?
That is tad misleading since it still lower than 2015, which is self lower than 2013...
If more bonds are coming along and there no new cash flow pouring in ( over the past few years its been negative, before recovering in 2017 = £40million) No wonder there no spare cash for stuff...
Bonds the company have:
With Stagecoach, its a tad more confusing but we'll come back to them later, if anyone wishes to rip this above to shreds please with a red pen
Not certain exactly what you're saying and I will defer to Winston who knows a lot more about the markets that me, but here goes....
As regards Stagecoach, they had a £400m bond that they were paying 5.75% (a bit like an interest free mortgage for want of a better analogy). They were paying interest of £23m and indeed, that was what they had to pay to leave that early (again, a bit like an early redemption fee). Instead, they'll now pay £16m in interest so it costs them for 3 years but then they'll be better off, having secured cheaper money over the term. They've probably taken the decision that interest rates will only go one way so bite the bullet now.
First Group have their 2018 bond maturing. As you can see, they have had to pay some hefty bond rates in the past (look at the 2008 and 2009 rates). They were obviously to finance the Laidlaw purchase and so were very much at a sellers rate, I would assume - we can go all round the houses about the Laidlaw purchase but we've had years to discuss that.
So with the 2018 due bond - at the current rate, they're paying just short of £25m a year in interest. Now, they have just been paying the interest - see page 27 of the 2017 results. Let's assume that they replace like for like (£300m) at a rate as per Stagecoach - that's £12m a year representing a near £13m upside by getting a cheaper interest rate. Of course, if they're able to replace with a lesser amount (e.g. £250m), then the benefit is greater still.
Not certain where your debt figures come from. Think the variance with your figures may exclude bond interest. However, they do show the impact of the rights issue in 2012/3 and, when you ask about "what happened to the £100m from UK Bus sell offs", well it was to both support that pay down of debt and to fund the urgently needed investment just to meet DDA deadlines. Down here in the West Country, the paucity of new vehicle investment was laid bare with 2009 (41 new vehicles) 2010 (6), 2011 (6) - that was everything including Bristol, Somerset, Devon and Cornwall. Can't recall anything for Cymru and when I remember their fleet in 2012, it was horrifically dated.
As it is, First's 2017 results showed the net debt as being £1.29bn, a drop of 11.2% vs. 2016's £14.1bn.
Bonds may seem like a waste of money but, like a mortgage, not many can buy a new house with cash and it's the same for businesses. Debt isn't necessarily a bad thing - it's how much it is, how much headroom you have, and your ability to pay it down.
The next set of group results will be very interesting to see a) the headline figures and b) how the debt pile has changed? Will things be sufficiently optimistic on a group level (not withstanding UK Bus) that a dividend could be paid. And yes, you do wonder how things might have been had Moir negotiated with Souter on the sale of Greyhound (rumoured that £750m was offered but Moir wanted £1bn) but, as we've discussed ad nauseum, we will never know!
