Tim O'Toole leaves First CEO role

[whole diary]

[JayMac]

It'll be a miracle if Tim O'Toole stays at the helm into the 2020s.

Turns out he couldn't make it beyond May 2018.

Full year FirstGroup results abysmal as predicted. Share price has plummeted. All is not well at FG Towers.

http://www.cityam.com/286687/firstgroup-chief-executive-tim-otoole-steps-down-immediate

[bradshaw]

Note the “onerous contract provision” on TPE^▸ (Trans Pennine Express). Another unrealistic franchise bid? Add that to the problems with GWR^▸ (Great Western Railway).....

First Group,which owns the South Western Railway franchise and is also a large bus operator in the UK^▸ (United Kingdom), reported a statutory loss before tax of £327m, citing non-cash impairment of Greyhound, and "onerous contract provision" on the TransPennine Express franchise.

That was down from a profit of £152.6m reported the year before.

[bradshaw]

Further information from Twitter

https://twitter.com/philatrail/status/1002083869770862593?s=21

TransPennine Express reports like-for-like revenue growth of 10% but says it is less than expected at time of bid. Posts £6.5m operating loss. Makes provision for £106m loss over remainder of franchise.

[grahame]

http://www.bbc.co.uk/news/business-44312684

Mr O'Toole, who had been with the company for eight years, has been replaced by Wolfhart Hauser, who becomes executive chairman, and Matthew Gregory, who becomes interim chief operating officer as well as chief financial officer.

Mr Hauser said: "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."

FirstGroup was examining "all appropriate means to mobilise the considerable value inherent in the group", he added.
'Operational challenges'

As part of that process, Greyhound's business model and prospects are now under review, Mr Hauser said.

The long-distance bus service had been unable to overcome the threat posed by ultra low-cost airlines, Mr Gregory said.

In the UK^▸ (United Kingdom), the Great Western and South Western rail franchises had "operational challenges to overcome" but were both profitable, he added.

However, the TransPennine Express franchise was loss-making and the group was providing for losses of up to £106.3m over the remaining life of the contract.

Noting the sharp relief and concentration on financial performance.  Always there of course but the contours show today.

[grahame]

Press release from yesterday

FIRSTGROUP PLC - Directorate Change

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

For immediate release 31 May 2018

FirstGroup plc
Directorate change

FirstGroup plc ("FirstGroup") announces that Tim O'Toole is stepping down from the Board and his position as Chief Executive today with immediate effect. The Board has asked Wolfhart Hauser to become Executive Chairman to which he has agreed until such time as a successor is appointed. Matthew Gregory will be appointed Interim Chief Operating Officer with immediate effect, and will also continue his responsibilities as Chief Financial Officer. The process to select a new Chief Executive is underway.

Commenting, FirstGroup Chairman Wolfhart Hauser said:

"On behalf of the Board I would like to thank Tim for his distinguished leadership of the company since 2010. During that time the Group has reinvested in its businesses, restored free cash generation and substantially strengthened its balance sheet. The Group is now a more stable and resilient enterprise, with a growing ability to capitalise on its leading positions in diverse transport markets."

Tim 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. I should like to thank the 100,000 employees who work so hard to deliver for our customers every day. It has been a privilege to work with them."

Contacts at FirstGroup:

Faisal Tabbah, Head of Investor Relations

Stuart Butchers, Group Head of Media

Tel: +44 (0) 20 7725 3354

Contacts at Brunswick PR^▸ (Public Relations):

Jonathan Glass / Andrew Porter / Alison Kay, Tel: +44 (0) 20 7404 5959

FirstGroup plc (LSE: FGP.L) is a leading transport operator in the UK^▸ (United Kingdom) and North America. With £6.4 billion in revenue and around 100,000 employees, we transported 2.1 billion passengers last year. Each of our five divisions is a leader in its field: In North America, First Student is the largest provider of student transportation with a fleet of 42,000 yellow school buses, First Transit is one of the largest providers of outsourced transit management and contracting services, while Greyhound is the only nationwide operator of scheduled intercity coaches. In the UK, First Bus is one of Britain's largest bus operators, transporting 1.6 million passengers a day, and First Rail is one of the country's largest and most experienced rail operators, carrying more than 260 million passengers last year.

Our vision is to provide solutions for an increasingly congested world... keeping people moving and communities prospering.

Visit our website at www.firstgroupplc.com and follow us @firstgroupplc on Twitter.

Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93.

Classification as per DTR 6 Annex 1R: 2.2. The person responsible for arranging the release of this announcement on behalf of FirstGroup is Michael Hampson, Group General Counsel and Company Secretary.

[LiskeardRich]

The figures aren’t as bad as first appears.
£277m write down on the Greyhound coach business in USA
£106m write down on the TPE^▸ (Trans Pennine Express) franchise.

Both one off write downs due to poor management decisions in the past.

Having these two items written down should result in an increased value to shareholders for a sale.

Of interest First Southwest (Kernow and buses of Somerset) turned a profit for the first time in many years and we’ve seen investment in both fleets as a result. I suspect the Hinckley point contract contributed heavily to the south west figures

[JayMac]

Losses of nearly £400 million are bad, regardless of how they came about. Company net debt stands at over £1 billion. If losses and debt are okay then the CEO^▸ (Chief Executive Officer) doesn't need sacking. Don't believe for a moment he really resigned of his own volition. He would have been told to fall on his sword. FirstGroup as a whole is close to being a basket case. Severe retrenchment, with large parts of the business going up for sale is the only hope. It can't survive in its current guise.

[TaplowGreen]

I would imagine the £1 million + payoff Mr O'Toole is receiving will soften the blow for him.

[Timmer]

He wouldn’t have left empty handed for sure.

[JayMac]

Hopefully it's just severance. It'd be crass of FirstGroup to give him a performance bonus.

EDIT: It's just under £700,000. He's actually being paid his salary, benefits and pension in lieu of notice, until 30th September. He's on gardening leave unit then. There's also the potential of a deferred bonus from 2017 dependant on investigations into the Croydon Tram crash. No other bonuses, dividends or share incentives will be paid.

https://www.pressandjournal.co.uk/fp/business/north-of-scotland/1489053/transport-group-chief-getting-700k-pay-off/

[TaplowGreen]

Hopefully it's just severance. It'd be crass of FirstGroup to give him a performance bonus.

EDIT: It's just under £700,000. He's actually being paid his salary, benefits and pension in lieu of notice, until 30th September. He's on gardening leave unit then. There's also the potential of a deferred bonus from 2017 dependant on investigations into the Croydon Tram crash. No other bonuses, dividends or share incentives will be paid.

https://www.pressandjournal.co.uk/fp/business/north-of-scotland/1489053/transport-group-chief-getting-700k-pay-off/

Blimey he'll have to watch the pennies! 

[Adelante_CCT]

Perhaps the UK^▸ (United Kingdom) could follow a similar model

https://www.financialexpress.com/infrastructure/railways/indian-railways-comes-up-with-unique-way-to-ensure-punctual-trains-delays-to-cost-officials-their-promotions/1191611/

My favourite part:

Clearly, the zones are using maintenance work as an excuse to hide their inefficiency,”

[TaplowGreen]

Perhaps the UK^▸ (United Kingdom) could follow a similar model

https://www.financialexpress.com/infrastructure/railways/indian-railways-comes-up-with-unique-way-to-ensure-punctual-trains-delays-to-cost-officials-their-promotions/1191611/

My favourite part:

Clearly, the zones are using maintenance work as an excuse to hide their inefficiency,”

If you hit senior rail management in the pocket in respect of poor service you'd be amazed at how quickly it improved......for starters, link Directors bonuses to Customer Satisfaction scores. I've seen it done, and the stunning effect on the priority that Customer service gets from on high as a result!

[LiskeardRich]

Perhaps the UK^▸ (United Kingdom) could follow a similar model

https://www.financialexpress.com/infrastructure/railways/indian-railways-comes-up-with-unique-way-to-ensure-punctual-trains-delays-to-cost-officials-their-promotions/1191611/

My favourite part:

Clearly, the zones are using maintenance work as an excuse to hide their inefficiency,”

If you hit senior rail management in the pocket in respect of poor service you'd be amazed at how quickly it improved......for starters, link Directors bonuses to Customer Satisfaction scores. I've seen it done, and the stunning effect on the priority that Customer service gets from on high as a result!

My former employer introduced this style bonus scheme in place of the former system that was numbers based.
We went from horrible people worried about numbers getting sales, etc to the nicest people ever overnight

[stuving]

As well as the results that came out yesterday, there was an announcement about a new CEO^▸ (Chief Executive Officer) - or rather a permanent one, as they have gazetted the stop-gap COO:

FIRSTGROUP PLC - Directorate Changes
Released : 13.11.2018

FirstGroup plc (‘FirstGroup’ or the ‘Group’), a leading provider of transport services in the UK^▸ (United Kingdom) and North America, has appointed Matthew Gregory as Chief Executive with immediate effect.

In addition to his role as Chief Financial Officer (CFO) of the Group Matthew has been performing the role of Interim Chief Operating Officer (COO), with the operating divisions reporting directly to him, since May 2018. Following this appointment, Chairman Wolfhart Hauser will revert to his non-executive Chairman role.

The Group also announces today that Steve Gunning has been appointed to the Board as an independent Non-Executive Director, with effect from 1 January 2019.

So, a money man - the traditional choice in a company that has been losing money.