John Kingham has an interesting article (http://t.co/CQESvMiMBN) on bus/train/transport operator FGP (FirstGroup), noting its high debt.
It prompted me to take a look at their prelims (http://is.gd/LTheEX), issued on 20 May. In it, we see that they’ve cancelled the dividend and will have a rights issue to the tune of £615m. This is higher than the current market cap of £585m. Bit of a disaster, really.
The rights issue it “to remove the constraints of the current balance sheet and enable the business to continue to invest for future returns, while reducing leverage”. I take that to mean “we’ve got way too much debt, and oh, something something about future returns”.
The RNS reads as being somewhat delusional, to me. “the Group’s diverse portfolio of businesses offer an attractive platform for sustainable growth”, “We believe that our wide-ranging stakeholders benefit from the diversity of the Group which underpins our wealth of expertise and unique knowledge”, “there is a resolute drive to harness our scale”. My particular favourite is “College students are early adopters of new technology”. Yes, because buses and trains are so avant garde. Apparently they’re actually referring to “smart ticketing” in that regard though. I’m over 30 years old, so of course I can’t be expected to understand what all the buzz is about.
“Client relationships are key to our First Transit business”. Apparently, we’re no longer calling them passengers, but clients.
“While Greyhound remains a cyclical business, the actions we have taken over recent years have enabled us to better position the division to leverage the benefits of a more flexible and agile operating model.” Seriously, what does all that actually MEAN?
“Our local management teams are introducing value for money fares structures in order to stimulate demand.” Huh? Isn’t this all standard stuff anyway?
Anyway, the RNS goes on and on like that, and I got bored reading it. Basically, it seems to me that the management have ABSOLUTELY NO IDEA what to do next, and hope that by using the words “growth”, “agile” and “strengthening” a lot, things will somehow get better.
The shares are down 43% over 1 year.