First Group: General Discussion

[Volvodart]

If that is the case, maybe some of the shareholders should be concerned about the assets apparently being sold so cheaply.

 

[Anthony ross]

I think to be honest the problem with whippet that it was poorly managed by tower transit that’s my personal opinion anyway

 

[Bungle965]

I think to be honest the problem with whippet that it was poorly managed by tower transit that’s my personal opinion anyway

How are they poorly managed?
Sam

 

[317 forever]

Stagecoach I would guess, although saying that they'd have an even bigger footprint than they do now.

The fact none of England's biggest three cities will have any proper First services in shows you how the mighty have fallen from all those years ago.

I think Stagecoach could purchase QR, Rotala BN and Transdev OM.

 

[317 forever]

Wonder if we could see Abellio decide to expand its bus business

Probably only if they foresee franchising. They recently withdrew their only commercial routes (which were in Surrey).

 

[Mwanesh]

How are they poorly managed?
Sam

I think as soon as Whippet got the National Express Contract they gave up on stage carriage work.The contract pays a steady income

 

[317 forever]

Rotala have the finance in place if required & publically announced they were looking to acquire potential disposals from the big group in Route one. I think NX must be a contender along with Transdev & possibly Go-Ahead.

I suspect Stagecoach will be unable to take part & Arriva aren't looking to expand.

The quoted sale price of £20 million sounds low. It will be interesting to see how these depots/routes perform under new owners & with investment.

Maybe the sale price is low due to a potential plan to retrieve modern vehicles - most notably E400s, E300s and Streetlites - and swap them with older buses from elsewhere. A similar thing happened when Stagecoach East Lancs and ChesterBus were sold. Then the new owners can find/fund their own replacements and stamp their own identities on their newly-acquired operations.

 

[317 forever]

Hardly a mad dash, First have been cutting back in Manchester for a long time, the disposal of Manchester will help First UK Bus Profits look better, as they will be losing £86 million turnover & a £5.8 million loss from group accounts.

The proceeds from the disposal will make little difference to the Groups finances or shareprice.

There's always a chance that First exclude some of the newer vehicles i.e. Streetlites (63 & 14 plate), E300's (13 plate) & E400's (12 & 14 plate) to cascade around and upgrade buses within the remainder of UK bus.

This would assist those remaining fleets and also enable quicker standardisation by the new owners.

 

[158756]

I think Stagecoach could purchase QR, Rotala BN and Transdev OM.

I think Stagecoach getting Queens Road would be bad news for whoever bought the other two - they'd be able to cherry pick all the most profitable routes into Manchester , and any split will leave the new operators in a weaker position to compete than First even if Stagecoach don't get any of it .

 

[Bungle965]

I think Stagecoach getting Queens Road would be bad news for whoever bought the other two - they'd be able to cherry pick all the most profitable routes into Manchester , and any split will leave the new operators in a weaker position to compete than First even if Stagecoach don't get any of it .

I really cannot imagine that Stagecoach will even be allowed to get Queens Road, they found it difficult even getting the JPT acquisition through.
Sam

 

[winston270twm]

If that is the case, maybe some of the shareholders should be concerned about the assets apparently being sold so cheaply.

Ultimately, it's the shareholders putting pressure on the board to improve group performance, group shareprice & reduce group debt. They can't have it all ways. But from the article, it does suggest more of a fire sale. I assume a single buyer willing to take on all 3 depots would be prepared to pay less, than 3 different operators buying one depot each / lower risk.

 

[Andyh82]

I wonder if it would be possible for routes to be purchased rather than depots

For example First only run 2 local routes in Rochdale and only 1 in Bury, which would be an ideal fit to join the Transdev network. But buying the whole of Oldham and Bolton they’d be looking at a completely different organisational structure as those depots are almost 2/3rds the size of the whole current Transdev operation.

 

[ivanhoe]

Ultimately, it's the shareholders putting pressure on the board to improve group performance, group shareprice & reduce group debt. They can't have it all ways. But from the article, it does suggest more of a fire sale. I assume a single buyer willing to take on all 3 depots would be prepared to pay less, than 3 different operators buying one depot each / lower risk.

Agree with your summary. I’d have thought Arriva would be up for this but current performance suggests otherwise. Reduction of debt is paramount for improved Share performance. Thing is though, would the cash from the sale alone make a substantial difference in the debt levels?

 

[Kahuna47]

I wonder if it would be possible for routes to be purchased rather than depots

For example First only run 2 local routes in Rochdale and only 1 in Bury, which would be an ideal fit to join the Transdev network. But buying the whole of Oldham and Bolton they’d be looking at a completely different organisational structure as those depots are almost 2/3rds the size of the whole current Transdev operation.

Transdev run competitive services on the Littleborough and a good chunk of the Ramsbottom circulars. Theres nowt stopping them registering a service for the remaining one - the Kirkholt circular. TBH, I'm suprised they haven't already done so, but it's such a short route through a little council estate it would probably easier to let it go to tender.

If Transdev come out empty-handed out of this debacle (a slim possibility to be fair), I wouldn't be suprised if they up their game on those routes and go in for the kill.

K

 

[winston270twm]

Agree with your summary. I’d have thought Arriva would be up for this but current performance suggests otherwise. Reduction of debt is paramount for improved Share performance. Thing is though, would the cash from the sale alone make a substantial difference in the debt levels?

DB are only really interested in expanding Arriva's European Bus Operations, they were rumoured to be looking for an exit from their entire UK operations themselves.

No, if all 3 Manchester depots are sold off for as little as £20 million as suggested, that wouldn't even scratch the surface. But obviously it would enhance First UK Bus division figures having removed a £5.8 million loss.

 

[overthewater]

Ultimately, it's the shareholders putting pressure on the board to improve group performance, group shareprice & reduce group debt. They can't have it all ways. But from the article, it does suggest more of a fire sale. I assume a single buyer willing to take on all 3 depots would be prepared to pay less, than 3 different operators buying one depot each / lower risk.

I just can't believe this is a Fire sale, its been talked about for a few years now. I wonder if all buses will be included because of the lower price.

 

[TheGrandWazoo]

If that is the case, maybe some of the shareholders should be concerned about the assets apparently being sold so cheaply.

Ultimately, it's the shareholders putting pressure on the board to improve group performance, group shareprice & reduce group debt. They can't have it all ways. But from the article, it does suggest more of a fire sale. I assume a single buyer willing to take on all 3 depots would be prepared to pay less, than 3 different operators buying one depot each / lower risk.

Winston is right on this. We have seen the issues of opportunistic carpet baggers trying to force a break up, though this hasn't been followed by most institutional investors joining in. However, doing the same old stuff is clearly not a strategy and so there's probably a recognition that they can either take a hit now, or they can continue to lose £6m a year and STILL have the issue of an asset that isn't worth what it says on the books and that they'll have to face into that at some time.

Therefore, the main body of shareholders are probably aware and think it's a necessary step.

To my mind, I think that aside from the threat of franchising aside, the Manchester ops will provide a real opportunity for some other businesses. Why First haven't been able to sort the business, who knows?

 

[TheGrandWazoo]

I just can't believe this is a Fire sale, its been talked about for a few years now. I wonder if all buses will be included because of the lower price.

Yes, mainly by you

It is a fire sale by definition that, having been trying to turn the business around for years (and not selling), they are now trying to offload for a fraction of its book value (and possibly market value) in a very short timeframe. So basically, the dictionary definition of a firesale

 

[overthewater]

Nope: not me.. Robertj21a remember

Fire sale, I mean its more likley First has been trying to find buyers for a while now.

 

[Rod Harrison]

I really cannot imagine that Stagecoach will even be allowed to get Queens Road, they found it difficult even getting the JPT acquisition through.
Sam

I agree Stagecoach would run the vast majority of the central city services. The only depot which they could get is Bolton with the existing reasonable competition there.

 

[In Focus]

I just can't believe this is a Fire sale, its been talked about for a few years now. I wonder if all buses will be included because of the lower price.

2 streetlites were transferred to Livingston in exchange for 2 older Gemini deckers about 2 weeks ago , might be more in pipeline . Not sure if it had any relevance to the sale in Manchester.

 

[TheGrandWazoo]

2 streetlites were transferred to Livingston in exchange for 2 older Gemini deckers about 2 weeks ago , might be more in pipeline . Not sure if it had any relevance to the sale in Manchester.

Wasn’t that a swap with Bath who desperately need additional deckers?

 

[TheGrandWazoo]

Nope: not me.. Robertj21a remember

Fire sale, I mean its more likley First has been trying to find buyers for a while now.

Think you’ve sold most OpCos to most people over the last 6 years

Likely sounds like you’re guessing but if they’ve been trying to offload for a while as you suggest, why hasn’t it happened?

 

[In Focus]

Wasn’t that a swap with Bath who desperately need additional deckers?

Not sure if the streetlites had been brought to Bolton depot from elsewhere before moving up to Livingston. Plan is for more Geminis to go South so you may well be correct.

 

[Robertj21a]

Nope: not me.. Robertj21a remember

Fire sale, I mean its more likley First has been trying to find buyers for a while now.

My comments on First Manchester some time back related to a very specific proposed sale, which was never finalised.

 

[overthewater]

Think you’ve sold most OpCos to most people over the last 6 years

Likely sounds like you’re guessing but if they’ve been trying to offload for a while as you suggest, why hasn’t it happened?

You would have to ask Robert why that never happened etc. I never believed Glasgow, Yorkshire or Manchester would go, but hey ho

 

[winston270twm]

You would have to ask Robert why that never happened etc. I never believed Glasgow, Yorkshire or Manchester would go, but hey ho

What with Manchester on the chopping block, I wouldn't be suprised to see First South Yorkshire follow suit or at least Doncaster Depot, especially with the possibility of strike action.

 

[Robertj21a]

What with Manchester on the chopping block, I wouldn't be suprised to see First South Yorkshire follow suit or at least Doncaster Depot, especially with the possibility of strike action.

Agreed, FSY needs to go if they are to hoping to keep the shareholders happy(-ish) - but I do just wonder if First could try a bit of experimentation by moving in a fresh MD with a clear brief to put a rocket up the operation........[Yes, probably all too late in the day I suppose]

 

[tbtc]

re Manchester - the rule of thumb that I've read before is that a bus company with revenue of £1m/pa is worth £1m (i.e. the asset value of a company is roughly the same as the annual turnover). I've seen mention of it once being worth "£100m" on paper but now being sold for only a fifth of that amount. Does anyone know when that £100m figure related to? e.g. was that for the combined revenue including Wigan operations and before Metrolink opened to Oldham/Rochdale? I'm just trying to get my head round exactly how much of a discount they are willing to taken on Manchester (was the £100m only ever a "book value" five or ten years ago and the operation never stood a chance of being sold for anything like that in 2019?

What with Manchester on the chopping block, I wouldn't be suprised to see First South Yorkshire follow suit or at least Doncaster Depot especially with possibility of strike action.

I'm not saying it wont' happen (a week ago I wouldn't have believed that First would be pulling out of Manchester yet retaining Rotherham/ Stirling etc!) but one complicating factor with Doncaster being split off is what would happen to the services in Rotherham (where Doncaster operate some of the "town services" and Sheffield do others, but for operational efficiencies a number of services are shared between the two depots, just a case of which duty can be squeezed onto which board).

I've been told for a long time on here that First would only sell the smaller bits of the UK bus operation and would never consider selling the Crown Jewels (e.g. Potteries might go but not the big city stuff), but things have clearly changed.

In some ways, South Yorkshire could be an attractive operation to take over - there's generally peace with Stagecoach, there's a reasonably supportive PTE (albeit cash constrained, but which PTEs aren't these days...), most of the "marginal" stuff around Sheffield has been ditched (or taken over by the likes of TM Travel etc), so it seems a relatively safe company to take over (compared to, say, buying depots that are in the middle of bus wars like Livingston). The fleet has been slowly getting rid of the B7Ls and Presidents (as second hand Geminis from Glasgow and Leeds headed south).

The fact that they've not bothered giving us a "local" livery might point to them not planning on keeping FSY in the long term?

Sheffield isn't as good as it used to be - the 2004 strike/ the Stagecoach incursion into most of the lucrative corridors etc - but the city centre is picking up again - so it might look better now than five years ago.

Take the Rotherham routes out of the equation and Doncaster is quite a self contained operation (bar the X78 to Sheffield), in a town where until recently bus services could be run on a hub/spoke basis - the waterways/ railways mean that pretty much everything ran into/through the town centre - instead of building an Out Of Town shopping mall, they built the Frenchgate right in the town centre - so the bus remains competitive for a lot of journeys (given that the shopping centre is right above the bus station) -there's almost no suburban railway services to compete with buses - so it could be good bus territory. But recently the town has started to change - a lot of employment now "out of town" (e.g. Amazon warehouses) - take a look at the 57/58 group of services to see how First have tried to cope with new housing developments and out of town attractions (Yorkshire Wildlife Park, Airport) - it's a complicated/ clever/ confusing mix of ten minute and half hourly services which mean a lot of people have got to memorise different route numbers and cross-reference up to three timetables to work out what used to be one simple service/timetable (e.g. the 170 to Cantley).

They've had a few Streetlites in the last couple of years but also been the dumping ground for the worst of the FSY fleet - partly because vehicles knackered by Sheffield hills can have a gentler retirement on flat Doncaster services - but you could certainly argue that they've not looked after what they have - the Stagecoach fleet in (roughly similarly sized, roughly similarly economically affected) Barnsley looks significantly better and more inviting.

But Stagecoach certainly wouldn't be allowed to buy FSY and I don't know who else has the cash/inclination to take on something of that size/ Go Ahead run EYMS around Hull though so maybe it's not beyond the realms of possibility that they'd be interested in Doncaster. Or TrentBarton... not so far from their Mansfield operations to Donny?

After Manchester has come up for sale though, it might be unwise to speculate too much as the conventional wisdom (that First would only really be interested in selling operations that nobody would want to pay much for - e.g. after dumping Northampton/ Plymouth etc they'd not consider selling anything A-list and only accept offers for little bits like Halifax/ Stoke... Manchester has turned that "wisdom" on its head - we might see a First that has recouped its losses by selling up in big cities but continues to operate in smaller places like Falkirk... who knows!

 

[overthewater]

With the on going loses at Manchester, I doubt anyone could now say its part of the Crown Jewels. If TrentBarton get the depots you just watch the knife come out and TM travel picking up more stuff.