Chairman's frank admission on transport firm
FirstGroup profits jump ‘reflects previous poor performance’
Retiring chairman John McFarlane noted how he found that some divisions were performing “well short” of its competitors when he took over in January last year.
A turnaround programme has led to a 46.5% rise in annual pre-tax profits to £163.9 million and an improvement in margins.
Mr McFarlane said: “It was “obvious that the group had not been delivering fully on (its) potential for some time.
“Two divisions in particular, First Student and UK Bus, were delivering margins well short of their competitors, parts of the business had suffered from a lack of appropriate investment, and the group as a whole was not achieving acceptable returns for shareholders. Turning this situation round has therefore been the key priority.
“In some respects, the significant improvements in financial results are a reflection of past underperformance.”
He said the group had secured a renewal of the Great Western and TransPennine Express franchises but lost out on five others. He said some had been won at rock bottom prices that the company was not prepared to match.
“We were disappointed not to secure the renewal of the First ScotRail franchise, and were unsuccessful in four other bids,” he said.
“But these were awarded at economic levels that were unacceptable to us. We were, and will remain, disciplined in our approach to bidding for these significant contracts.”
Mr McFarlane is succeeded by Wolfhart Hauser, and group finance director Chris Surch will retire next January.
Chief executive Tim O’Toole said: “Overall trading for the year is in line with our expectations and our transformation plan is beginning to deliver improving financial performance, though clearly much hard work remains ahead of us.”