FirstGroup CEO leaves amid £327m loss

Tim O’Toole

UPDATE 2 — Aberdeen-based bus and rail giant FirstGroup plc — which recently rejected a takeover approach from US private equity firm Apollo Global Management — said on Thursday that its under-pressure CEO Tim O’Toole is stepping down with immediate effect.

Wolfhart Hauser will become executive chairman until a successor CEO is appointed.

FirstGroup said it is now “examining all appropriate means to mobilise the considerable value inherent in the group.”

Matthew Gregory will be appointed interim chief operating officer with immediate effect, and will also continue his responsibilities as chief financial officer.

FirstGroup shares fell almost 10%.

FirstGroup, which has also been under pressure from Canadian activist investor West Face Capital, said further that it could sell its Greyhound bus business in the United States.

Hauser said FirstGroup’s annual results announced Thursday “fell short of our ambitions” as the company reported a statutory loss before tax of £326.9 million “reflecting £277.3 million Greyhound goodwill and other asset impairments, £106.3 million TPE (TransPennine Express) onerous contract provision and other adjusting items.”

FirstGroup reported a 5% fall in adjusted pretax profit to £197 million for the year to March 31, despite revenue rising 13.2% to 6.4 billion.

FirstGroup blamed the performance of Greyhound in the United States for the fall in profit.

The process to select a new chief executive is underway.

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.”

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 …

“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 …”