First Group: General Discussion

[Blackpudding]

Just following on with the Financial results, year ending April 2018 (So 9+ months ago):
In Geographical sequence - North to South: -

Aberdeen - Operating Loss = £745,000 on a turnover of £25.6M (Down from a profit of £1.9m year before).
Midland Bluebird - Operating Loss = £1.1M on a turnover of £22.7M (Loss reduced, compared to a loss of £2M year before).
Scotland East - Operating profit = £639,000 on a turnover of £8.8M (Down from a profit of £809,000 year before).
Glasgow No 1 - Operating profit = £4.1M on a turnover of £88M (Profit up from £2.9M year before).
Glasgow No 2- Operating profit = £7.2M on a turnover of £43.2M (Profit up from £6.5M year before).
York - Operating Loss = £0.02M on a turnover of £16.4M (Loss reduced from £700,000 year before).
West Yorkshire - Operating profit = £11.6M on a turnover of £135.2M (Profit down from £11.7M year before)
Manchester - Operating Loss = £5.7M on a turnover of £86.1M (Loss increased from a loss of £5.1M year before)
South Yorkshire - Operating Loss = £2.2M on a turnover of £62.4M (Loss down from £4.5m year before).
Potteries - Operating profit = £10,000 on a turnover of £17.1M (Profit down from £700,000 last year).
Leicester - Operating profit = £2M on a turnover of £15.5M (Profit down from £2.2M year before).
Eastern Counties - Operating profit = £1.7M on a turnover of £37.5M (Profit up from £0.2M year before.
Essex - Operating Loss = £2.9M on a turnover of £53M (Into Loss from a profit of 0.3M year before).
Worcester - Operating profit = £0.7M on a turnover of £8.1M (Profit up from £32,000 year before).
South Wales - Operating profit = £3.4M on a turnover of £37M (Profit down from £4M year before).
West of England - Operating profit = £0.8M on a turnover of £98.7M. (Into profit from a loss of £7.7M year before)* Figures are complicated by the fact that the First Bristol operation was merged into West of England from 26/03/2017).
South West - Operating profit = £525,000 on a turnover of £34.3M (Into profit from a loss of £1.8M year before).
Hampshire & Dorset - Operating Loss = £0.1M on a turnover of £41.3M (Into Loss from a profit of £844,000 year before).
Beeline - Operating profit = £0.8M on a turnover of £15.1M (Profit down from £931,000 year before).
Aircoach (Northern Ireland element only) - Operating Loss = £32,000 on a turnover of £4.1M (Into loss from a profit of £71,000 year before).
I Don't have figures for The Republic of Ireland operation.

There are of course many varied reasons why the results are as they are, Redundancy costs, Tender awards, Pay rises etc etc.

Surreyman. You need to include First Pioneer Bus to see the overall picture in Manchester. The Pioneer Bus accounts state there was a 'realignment of restructuring costs across group companies'. £544k profit this year against (£580k) loss last year.

 

[F Great Eastern]

Aircoach (Northern Ireland element only) - Operating Loss = £32,000 on a turnover of £4.1M (Into loss from a profit of £71,000 year before).
I Don't have figures for The Republic of Ireland operation.

Republic of Ireland ones are not in yet, will be nearer to March since different filling system requirements there.

 

[Surreyman]

Blackpudding, thanks for the reminder, I note that this company traded for less than a month of the financial year 2017-2018, closing on 23/04/2017.
I note the accounts state "Turnover of £242,000" (Less than a month of trading) then '"Restructuring costs of 1.1M led to an Operating loss of £580,000".
" In the period ended 31/03/2018 there was a realignment of of restructuring costs across group companies, which resulted in a credit of £651,000 in First Pioneer Bus"
I can't claim to be an accountant so I am guessing this is clever accounting, closure costs being covered by funds transferred from within the group, presumably resulting in a more 'favourable' position financially??
Anyone more financially literate than I am care to comment?

 

[Baxenden Bank]

Just following on with the Financial results, year ending April 2018 (So 9+ months ago):
In Geographical sequence - North to South: -

Aberdeen - Operating Loss = £745,000 on a turnover of £25.6M (Down from a profit of £1.9m year before).
Midland Bluebird - Operating Loss = £1.1M on a turnover of £22.7M (Loss reduced, compared to a loss of £2M year before).
Scotland East - Operating profit = £639,000 on a turnover of £8.8M (Down from a profit of £809,000 year before).
Glasgow No 1 - Operating profit = £4.1M on a turnover of £88M (Profit up from £2.9M year before).
Glasgow No 2- Operating profit = £7.2M on a turnover of £43.2M (Profit up from £6.5M year before).
York - Operating Loss = £0.02M on a turnover of £16.4M (Loss reduced from £700,000 year before).
West Yorkshire - Operating profit = £11.6M on a turnover of £135.2M (Profit down from £11.7M year before)
Manchester - Operating Loss = £5.7M on a turnover of £86.1M (Loss increased from a loss of £5.1M year before)
South Yorkshire - Operating Loss = £2.2M on a turnover of £62.4M (Loss down from £4.5m year before).
Potteries - Operating profit = £10,000 on a turnover of £17.1M (Profit down from £700,000 last year).
Leicester - Operating profit = £2M on a turnover of £15.5M (Profit down from £2.2M year before).
Eastern Counties - Operating profit = £1.7M on a turnover of £37.5M (Profit up from £0.2M year before.
Essex - Operating Loss = £2.9M on a turnover of £53M (Into Loss from a profit of 0.3M year before).
Worcester - Operating profit = £0.7M on a turnover of £8.1M (Profit up from £32,000 year before).
South Wales - Operating profit = £3.4M on a turnover of £37M (Profit down from £4M year before).
West of England - Operating profit = £0.8M on a turnover of £98.7M. (Into profit from a loss of £7.7M year before)* Figures are complicated by the fact that the First Bristol operation was merged into West of England from 26/03/2017).
South West - Operating profit = £525,000 on a turnover of £34.3M (Into profit from a loss of £1.8M year before).
Hampshire & Dorset - Operating Loss = £0.1M on a turnover of £41.3M (Into Loss from a profit of £844,000 year before).
Beeline - Operating profit = £0.8M on a turnover of £15.1M (Profit down from £931,000 year before).
Aircoach (Northern Ireland element only) - Operating Loss = £32,000 on a turnover of £4.1M (Into loss from a profit of £71,000 year before).
I Don't have figures for The Republic of Ireland operation.

There are of course many varied reasons why the results are as they are, Redundancy costs, Tender awards, Pay rises etc etc.

I think the accountants should enter masterchef.
Re First Potteries:
If you take out restructuring costs of £952,000, impairment of £800,000 (premises lease £619k and ticket machines £181k) and the other £193,000 its a £1.95m profit. Quite decent really.

 

[TheGrandWazoo]

I think the accountants should enter masterchef.
Re First Potteries:
If you take out restructuring costs of £952,000, impairment of £800,000 (premises lease £619k and ticket machines £181k) and the other £193,000 its a £1.95m profit. Quite decent really.

I’m not an accountant but isn’t property a poss reflection of changes as to how leases now have to be treated as a consequence of IFRS16 as they’ve not offloaded Newcastle depot (assume that is what it is). Ref the ticket machines, that’s writing off kit and so it has come off the balance sheet and so be shown in the P&L?

Can’t comment about the restructuring stuff etc.

 

[Baxenden Bank]

I’m not an accountant but isn’t property a poss reflection of changes as to how leases now have to be treated as a consequence of IFRS16 as they’ve not offloaded Newcastle depot (assume that is what it is). Ref the ticket machines, that’s writing off kit and so it has come off the balance sheet and so be shown in the P&L?

Can’t comment about the restructuring stuff etc.

I was more commenting on the apparent poor performance (£10k on £17m turnover) and that that shouldn't be read at face value - as you had pointed out in #8670. Of course all of the 'exceptionals' are part of the overall story as regards the overall performance of the group. But looking at a business going forwards basic bums on seats, how much they paid and how much they cost is a key variable. One-off adjustments can be financial chicanery to allow presentation of information in a certain way. If you have a very good year, but wish to present it otherwise (eg to justify higher ENCTS re-imbursement), find something to write down early. If you have a good year but expect a bad one soon, write things down now to allow presentation of a better picture in that future year. Or in the opposite direction, massage the figures better by extending vehicle life from 15 to 17.5 years.

Some may suggest that buying yet another set of new ticket machines, prior to the end of life (financial or physical) of their predecessors is not a good business decision. Like buying a loaf of bread yesterday and throwing half of it away today just because you fancied a fresh one today - even though yesterday's was still good to eat! Does the return on investment in Ticketer generate a return equivalent or greater to the write down? That money could have been given to shareholders as a dividend, or used to pay down debt further.

Note the 2016/17 accounts have been revised. Last year -£2,497m in unspecified 'other external charges', this year the same figure for that year is -£1,738m (correction) -£1,835 with the remainder set out elsewhere. Same overall out-turn, different way of presenting it.

mmm I think the oven is at the right temperature, time for some accounts baking to make the council/newspaper/populace think we are doing badly so we can justify more service cuts. Few people read into the detail and do successive year comparisons.

As an aside, I note in the directors report "the longer-term strategy is to increase the frequency of the shorter interurban routes to capitalise on the heavier footfall on these services". Does he mean the shorter urban routes? As there are few interurban routes operated now.

I look forward to the (delayed) annual bus-usage statistics due at the end of the month!

 

[BBC]

Taking out the one off costs from west of England gets you to around £4 million profit, not bad from a 7.7 lose the year before. Rolling Bristol into that company did the job.

 

[oldman]

As an aside, I note in the directors report "the longer-term strategy is to increase the frequency of the shorter interurban routes to capitalise on the heavier footfall on these services". Does he mean the shorter urban routes? As there are few interurban routes operated now.

There are six towns in the Potteries so much of the network is interurban . According to some academic 'There is an incredible parochialism in the six towns from local residents and for them Hanley may as well be Paris.'

 

[TheGrandWazoo]

I was more commenting on the apparent poor performance (£10k on £17m turnover) and that that shouldn't be read at face value - as you had pointed out in #8670. Of course all of the 'exceptionals' are part of the overall story as regards the overall performance of the group. But looking at a business going forwards basic bums on seats, how much they paid and how much they cost is a key variable. One-off adjustments can be financial chicanery to allow presentation of information in a certain way. If you have a very good year, but wish to present it otherwise (eg to justify higher ENCTS re-imbursement), find something to write down early. If you have a good year but expect a bad one soon, write things down now to allow presentation of a better picture in that future year. Or in the opposite direction, massage the figures better by extending vehicle life from 15 to 17.5 years.

Some may suggest that buying yet another set of new ticket machines, prior to the end of life (financial or physical) of their predecessors is not a good business decision. Like buying a loaf of bread yesterday and throwing half of it away today just because you fancied a fresh one today - even though yesterday's was still good to eat! Does the return on investment in Ticketer generate a return equivalent or greater to the write down? That money could have been given to shareholders as a dividend, or used to pay down debt further.

Note the 2016/17 accounts have been revised. Last year -£2,497m in unspecified 'other external charges', this year the same figure for that year is -£1,738m (correction) -£1,835 with the remainder set out elsewhere. Same overall out-turn, different way of presenting it.

mmm I think the oven is at the right temperature, time for some accounts baking to make the council/newspaper/populace think we are doing badly so we can justify more service cuts. Few people read into the detail and do successive year comparisons.

As an aside, I note in the directors report "the longer-term strategy is to increase the frequency of the shorter interurban routes to capitalise on the heavier footfall on these services". Does he mean the shorter urban routes? As there are few interurban routes operated now.

I look forward to the (delayed) annual bus-usage statistics due at the end of the month!

I know what you say about creative accounting in terms of firms and how you can have complex inter-company transfers etc - (the "Dutch Sandwich" being the most prominent in ways of avoiding taxation) or creating the right sort of financial message! Whether First are doing that in how they allocate "restructuring costs", I really don't know. The move to extending the asset life of vehicles was undoubtedly one to improve the financial performance of the business in the short term.

However, I think you're being a little unfair on a couple of these ones. The changes that surround IFRS16 are not something that's optional and it's really to stop ALL businesses overstating their financial health by not accounting for leases on their balance sheets. As Newcastle depot is still leased then I assume that has to be reflected in the accounts. I'm not an accountant but have had some exposure to this change in my work.

As regards the ticket machines, that's also pretty understandable. Ordinarily, you'd not want to write off the machines before the end of their asset life. However, they have clearly worked out that after that one off, the benefits (in terms of fare evasion, providing customers with contactless etc) are worth it and will provide year on year benefits.

 

[overthewater]

I take it the talk a while back from Nat Express was all smoke and mirrors?

 

[Alexbus12]

Rusholme Depot is to close tonight, with drivers and routes moved to Queens road, and buses moved to Oldham and Bolton, in exchange for B9s and B7RLEs which are due to go to Queens.

 

[winston270twm]

I take it the talk a while back from Nat Express was all smoke and mirrors?

No, I suspect there was a big difference between what First Group will accept to sell anything, against what any buyer was prepared to pay. None of the sale rumours in any division have materialized in to anything including breaking up the group.

 

[TheGrandWazoo]

No, I suspect there was a big difference between what First Group will accept to sell anything, against what any buyer was prepared to pay. None of the sale rumours in any division have materialized in to anything including breaking up the group.

Absolutely and, as we've mentioned before, if the value of the firm is £xm on the books and any sale is considerably less at £ym, then that loss needs to be reflected in the results. With the exception of the slightly mystifying GM ops (cue conspiracy theories), there's not much in UK Bus that either needs to be jettisoned, or is marginal and will realise much.

As for other group subsidiaries, that is probably the same on a larger scale.

 

[overthewater]

There were only a few place I would have thought that a good fit or odd on for National express, the rest didn't seem worth it. I doubt the likes of NE would want Berkshire, stoke, let along Manchester.

 

[Jordan Adam]

There were only a few place I would have thought that a good fit or odd on for National express, the rest didn't seem worth it. I doubt the likes of NE would want Berkshire, stoke, let along Manchester.

NX would probably have interest in Aberdeen as it's near their current Dundee operation and it would strengthen their power in the region too. It could even put them in a position to go up against Stagecoach on rural work between Aberdeen and Dundee (many of which is subsidised).

I better stop dreaming though as it's a rather worrying thought given the way they have treated XD over the years!

 

[F Great Eastern]

Aircoach have took delivery of 8 new Plaxton Panther 3 coaches this week. These will be the first Aircoach vehicles to feature White LED displays and will feature Brusa Extend 300 seating in place of the previous Fainsa Gala seating and a new design toilet. Otherwise they remain the same as batches delivered since 2014.

1 of the new vehicles will be the Official Team coach of the Leinster Rugby team and will allow the the existing 2015 team coach to be deployed onto the Cork route, allowing a Cork 2014 Panther to become the Cork based spare, allowing the withdrawal of the current Cork based spare, a 2005 Setra.

The other 7 new vehicles will be for the Dublin to Cork route and will allow 7 of the 2014 Panthers on the route to be cascaded to other services. This will allow 7 Volvo Jonckheere coaches from 2008 to be returned off lease. The Cork route allocation will then be 2x 2014 (+1 spare) 1x 2015, 3x 2016 and 7x 2019 Panthers.

The 52 strong coach fleet will then stand as follows
- 5x 2009 Volvo B12T / Jonckheere SHV
- 16x 2014 Volvo B11R / Plaxton Panther 3
- 6x 2015 Volvo B11R / Plaxton Panther 3
- 6x 2016 Volvo B11R / Plaxton Panther 3
- 4x 2017 Volvo B11R / Plaxton Panther 3
- 7x 2018 Volvo B11R / Plaxton Panther 3
- 8x 2019 Volvo B11R / Plaxton Panther 3

The Dublin Airport shuttle contract currently operating with 1x 2005 Citaro Artic, 9x 2008 Citaro Artics, 2x 2009 Citaro Artics on car park shuttles and 1x 2002 Rigid Citaro, 1x 2006 Volvo B7RLE / Wright Eclipse and 1x 2013 Streetlite Max will come up for renewal this year and new vehicles will be required by the winning bidder of the tender.

 

[borage]

FirstGroup to jettison loss-making Manchester bus network:

Transport giant FirstGroup is selling one of its biggest regional bus divisions in a bid to stem mounting losses.

The Manchester operations, once worth about £100m in annual turnover, are to be sold in a cut-price deal, The Telegraph understands.

Hundreds of buses across three depots in Bury, Oldham and Bolton, will be sold to rival operators.

Industry sources indicated FirstGroup may sell up in the north west for as little £20m. Each of the sites will be sold to separate bus companies, they added.

Recent analysis suggests Manchester, FirstGroup’s fourth-biggest regional bus network by revenue, has veered sharply into the red and is now its worst performing UK network.

 

[winston270twm]

Interesting..... sounds like a done deal.

https://www.telegraph.co.uk/busines...-jettison-loss-making-manchester-bus-network/

Transport giant FirstGroup is selling one of its biggest regional bus divisions in a bid to stem mounting losses. The Manchester operations, once worth about £100m in annual turnover, are to be sold in a cut-price deal, The Telegraphunderstands. Hundreds of buses across three depots in Bury, Oldham and Bolton, will be sold to rival operators. Industry sources indicated FirstGroup may sell up in the north west for as little £20m. Each of the sites will be sold to separate bus companies, they added. –– ADVERTISEMENT –– Recent analysis suggests Manchester, FirstGroup’s fourth-biggest regional bus network by revenue, has veered sharply into the red and is now its worst performing UK network. It made about £3.5m of operating profit on £101m of turnover in 2012/13. However, by 2017/18 it had racked up £5.8m of operating losses on revenues of £86m, trade publication Passenger Transport reported. The bus fire sale comes as FirstGroup remains under pressure from investors to dispose of assets. Some investors believe its student and urban bus operations in North America alone were worth more than its current stock market value of £1.2bn. Meanwhile, questions continue to be asked over FirstGroup’s commitment to UK rail with Great Western, South Western and Transpennine Express franchises all continuing to struggle. CREDIT: JOEL ANDERSON/JOEL ANDERSON However, FirstGroup says it is hamstrung from bowing completely to shareholders' wishes because of a £200m pension hole. “We can’t ignore some of the structural issues, particularly around pensions, in our UK defined benefit scheme,” chief executive Matthew Gregory said last year. British bus operations generated the biggest percentage profit margins in the company’s most recent half-year results in November. A FirstGroup spokesman said: "We don’t comment on market rumours or speculation. We keep all bus services, depots and the business portfolio under constant review so we can be responsive to changes in market conditions.”

 

[Jordan Adam]

I know many will disagree but this is a really great move.

Anyone who knows me or my views will know i've been calling for this for quite some time.

 

[F Great Eastern]

It's a done deal and it may well not be the only business being cut adrift in the first half of this year. from what I have heard so keep your eyes peeled for more.

 

[Baxenden Bank]

I know many will disagree but this is a really great move.

Anyone who knows me or my views will know i've been calling for this for quite some time.

It will be a good move if First haven't managed to kill the market in the few years leading up to the (potential) sale. Perhaps The Potteries will be next, but please not to D & G the "Monday to Friday 0930 to 1500 with a 35 minute lunchtime gap specialists".

 

[Anthony ross]

Wonder who could be in line for the Manchester fleet

 

[F Great Eastern]

Wonder who could be in line for the Manchester fleet

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.

 

[Jordan Adam]

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.

Can't see Stagecoach getting it. National Express is at the top of my predictions.

 

[Robertj21a]

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.

It says that the sites will be sold off to *separate* bus companies.

 

[Andyh82]

It says that each depot will be sold to a different operator.

It could be someone like Transit Systems, Comfort Delgro rather than the obvious.

Of course the article is also wrong, as there isn’t a depot in Bury, but there is a depot in Manchester.

 

[tbtc]

It says that the sites will be sold off to *separate* bus companies.

That's the surprising bit (to me) - whilst selling off depots individually may make bits more attractive to a "medium" buyer (rather than just one of the other massive companies), it'd be quite a risk to buy only one of them, given that you'd then potentially be facing competition from all sides.

People will spin this various ways (e.g. how much of this is because of Burnham's plans or despite them) but there's something worrying for the bus industry when one of the biggest companies can't survive in one of the biggest cities (an operation that it's managed for over twenty years). Rather than celebrating (as some enthusiasts no doubt will), we should be soberly looking at the kind of problems experienced in struggling places like Bolton (given the changes to working/ shopping/ drinking since First took over in the mid-90s) and assessing how other towns will survive.

Stagecoach were allowed to buy Wigan without competition problems (which would have been unthinkable once upon a time) but I don't know how the neighbouring bits of Stagecoach/ Arriva/ Transdev will affect who is allowed to buy what in Greater Manchester.

 

[TheGrandWazoo]

Big news and still a surprise in many respects. Big balance sheet hit and I’d wondered if that and the pensions would be a hurdle but £6m adverse pa (and declining) is obviously too much to bear. Assume Transdev would be an obvious candidate given their proximity.

 

[overthewater]

A few points:

* I think Transdev will be in the eyeing up one of the depots for sure, I think Go ahead and Diamonds could also be a good shout.
* Who was the original buyer for Manchester before the deal went pop?
* It seems this is a cut-price deal which does highlight the fact First would cut and run of an offer come a calling...

Its possible the potters could be next however that would be the limit to the sell offs of the company unless Nat express made an offer..

 

[Anthony ross]

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