First Group has announced that their Chief Executive has left the company as they announce a £327 million loss in their most recent financial statements.
First Group, as well as running a host of bus companies, operate the Great Western Railway franchise – running from London Paddington to the South West and South Wales, and TransPennine Express, which operates in the North of England in Manchester, Liverpool, York and up into Scotland.
As well as running those franchises, First Group also operates the South Western Railway franchise.
Also in the Financial Summary, it showed that revenue was up from £5.6bn in 2017 to £6.3bn in 2018, an increase of 13.2%.
Chief Executive Tim O'Toole has said that he is going to stand down from the role with immediate effect.
Wolfhart Hauser will take over Mr O'Toole's role of Chief Executive. Matthew Gregory now becomes Interim Chief Operating Officer as well as Chief Financial Officer.
What did the officials say?
Speaking to BBC News, Mr O'Toole said:
“The time is right for me to step aside. Today's results clear the way for the new approach sought by our chairman and the board.”
RMT General Secretary Mick Cash said:
“This looks like First Group are preparing for another buyout move by US private equity group Apollo Management. The crisis at First Group just underlines the chaotic nature of the transport industry in Britain under this Tory Government.
“RMT is seeking assurances that the bunch of speculators eyeing up First Group will not be allowed to asset strip the British transport sector for the benefit of their shareholders. We've seen from the chaos on our railways over the past two weeks just what happens when greed is allowed to let rip.
“The only solution to this kind of uncertainty and instability is public ownership and the renewed threat of a US-based hostile takeover of First Group just reinforces that core message.”
Commenting, Chief Financial Officer and interim Chief Operating Officer Matthew Gregory said:
“In the year, our largest division First Student was broadly stable and First Bus took an encouraging step forward in its margin improvement plans. This was offset by the cost challenges experienced by First Transit in the first half and by Greyhound's inability to overcome the structural shift taking place in its long haul markets, as ultra low cost airlines significantly increase capacity and extend into new markets. In First Rail, although our GWR and SWR rail franchises have operational challenges to overcome, they are both profitable and are adding value to the Group. However our TPE franchise was loss-making, and we have taken the decision to provide for forecasted losses of up to £106.3m over the remaining life of the contract. This does not affect our plans for the remainder of the franchise to increase capacity on the TPE network by more than 80% and create a true intercity railway for the North.
“Looking forward, we expect Group adjusted earnings to be broadly stable, with opportunities to improve the margins, returns and cash generated from our Road divisions, which together represent more than four fifths of the Group's adjusted profit, in a period when we expect the contribution of our Rail portfolio to be positive but smaller while we put in place the passenger capacity and conditions for further profitable growth in the division in future.”
Executive Chairman Wolfhart Hauser said:
“The Group delivered stable adjusted earnings per share and sustained cash generation this year, and the balance sheet has been strengthened through the bond refinancing and further deleveraging. FirstGroup's vision and purpose is to provide solutions for an increasingly congested world, keeping people moving and communities prospering, and as such the Group plays a vital role in all of our local areas. It is now a more stable and a more resilient enterprise, with a growing ability to capitalise on the leading positions we have in our markets. However, this year's results fell short of our ambitions – we are disappointed that we did not make the further progress we intended based on the trends we saw at the end of the previous financial year.
“The Board is examining all appropriate means to mobilise the considerable value inherent in the Group. Initial actions from its evaluation are underway, including conducting a full external review of Greyhound's business model and prospects, which will conclude in the coming months. As we do so, we will continue to strengthen the Group by using the sustained cash generated after disciplined investment to reduce leverage further and for targeted growth. Overall, we see considerable opportunity to deliver shareholder value in a sustainable way while enhancing the services we provide to our customers and communities.”
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