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Statement re Greyhound property sale
Released : 20.09.2022
FIRSTGROUP PLC
GREYHOUND PROPERTY SALE
FirstGroup to sell almost all of its remaining legacy Greyhound property portfolio to Twenty Lake Holdings for c.$140m net proceeds
Following the sale, the Group's exit from residual Greyhound assets and liabilities will be substantially complete at an aggregate net value in excess of $160m since the start of the current financial year, ahead of expectations
Completion of the portfolio sale and receipt of proceeds expected in December 2022
FirstGroup plc ('FirstGroup' or the 'Group') today announces the sale by its subsidiary FirstGroup Services, Inc. of all but two of its remaining Greyhound US properties to Twenty Lake Management LLC, an affiliate of Twenty Lake Holdings LLC (the 'Buyer'), for net proceeds of c.$140m. The portfolio sale is subject to customary closing conditions for a transaction of this nature, with closing expected to occur and the proceeds received in cash in December 2022. In addition to the portfolio sale, the Group also completed the sale of a site in Denver for net $9m in August 2022, with some of the proceeds being applied in further de-risking of the residual Greyhound pensions liabilities.
In aggregate the book value of the Greyhound properties sold since the year end was c.$60m as at 26 March 2022, and as a result a profit on sale of c.$90m (net of property tax, selling and other costs) is expected to be booked in the current financial year.
Following these property sales, FirstGroup's residual exposure to legacy Greyhound assets comprises deferred consideration, residual real estate in Canada and two sites in the US (both under contract subject to due diligence), and funding awards from the Coronavirus Aid, Relief, and Economic Security ('CARES') Act and American Rescue Plan ('ARP') schemes relating to the period Greyhound was under the Group's ownership, altogether valued at c.$57m in total. This value is partially offset by legacy Greyhound liabilities (comprising residual insurance and pension liabilities which FirstGroup expects to de-risk in due course) and other provisions, together valued at c.$35m.
The Group will update on the application of the proceeds of the Greyhound property sale alongside publication of its half-yearly results in November.
Graham Sutherland, FirstGroup Chief Executive Officer, said:
"The sale of these residual Greyhound properties is another milestone in refocusing FirstGroup on our strong positions in bus and rail in the UK. We look forward to building on our robust platform for growth and shareholder value creation in future."
Contacts at FirstGroup:
Investor relations: Faisal Tabbah
Media: Stuart Butchers
corporate.comms@firstgroup.co.uk
Tel: +44 (0) 20 7725 3354 Contacts at Brunswick PR:
Andrew Porter / Simone Selzer
Tel: +44 (0) 20 7404 5959
The markets are driven by fear at the moment, not by the fundamentals of a company. I personally think the fall in RTN, along with many other companies, that share price reductions are way overdone by the current sentiment. The UK maybe in recession or heading for one and inflation is rising, as are the costs of the war in Ukraine, these will all be mitigated in some way or another in the coming year or so. Share prices are supposed to reflect the future earning capability of companies, the valuation methods vary from sector to sector however markets seem to have forgotten this and are pricing based on the " we are all doomed" model as that seems to be what is being used currently! If this keeps a large chunk of UK firms will be ripe for takeover by US equity firms who will see the intrinsic value of companies far greater than the current chicken feed valuations! I maybe being overly optimistic in my naivety, but it all looks at bit like hysteria to me at the moment that is media driven! All we can hope for is some sanity returns to markets sooner rather than later.
Yes it was previous loans. They also paid down £500k in old debt.
The cash used to keep the "ship afloat" was circa £500k and included interest payments. Circa £1.m in cash was invested in inventories, as per note 8, so a working capital investment that reflects a fast growing business. That combined with investments accounted for the majority of the £4m loan drawdown. The level of debtors has increased only marginally since Dec 21 and again reflects increased revenue growth. I do share concerns re this level but suspect it is a consequence of more orders for government organisations who are very slow payers! Cash management is crucial for any growing business and expect a positive EBITDA for 2022 however additional cash will be required to fund growth if momentum is to be continued at current levels for 2023.
The results were as anticipated. The sp is a reflection of a wider malaise rather than company specific imv. When we start to get certainty re war, inflation, etc confidence will return and sp will move accordingly. The question is when, in the interim we can only wait and see, frustrating I appreciate but as they say the world is where it is!
DVRG should be cash generative in 2022 before interest, investments and exceptionals as a positive EBITDA is forecast. Admin costs last year included circa £3.2m in the non cash items amortisation and depeciation.
Progress continues, happy days, distribution next year.
Not sure ODX brokers have set a target price of 12p, that is when the directors options kick in, not quite the same!
For me the issue is the unwillingness of governments over the last 5 decades or so is to upgrade the UK 's Victorian sewage system at £10's of billions of cost (Trat posted something on this a government committee reporting some months ago on this). We still have waste water (grey/rain water) and sewage mixing hence the issue, when there is heavy rain it gets discharged into sea and rivers untreated, as sewage plants cannot cope with volumes of sewage/wastewater, is my understanding. It all about cost and priorities of many past governments. Climate change is now highlighting the lack of investment in water and sewage provision in the UK, water companies (since privatisation) make a good patsy for politicians of all ilks as they are all culpable!
The incentive plans were included in full in this years annual report published in June this year. It is worth noting the vesting and holding periods and conditions to be met before these awards are paid out. None of which was reported in the media, only the headline about the payout! Completely agree investment decisions should be made on information available, you just need to be sure you have all the information and not just selective views.
I do laugh when people claim things that are contrary to their previous history!
It may well come to pass that the government strips FGP of its contract, however they need a reason to do so. It is clear that the reduction in services in this area are as a consequence of staffing availability which would apply regardless of who manages these services currently. The bottom line is when rail dispute settled
Admin included about £3m in amortisation as a consequence of modern water acquisition. This will not increase proportionately in 2022. DVRG will not make a net profit in 2022 imv but will be positive in EBITDA and cash generative before exceptionals.
I doubt they would have rejected the bid without the support of their major institutional shareholders. It is now up to the BoD to deliver on the contingent value with subsequent returns to shareholders. Just have to wait and see!
Tend to agree market over reaction to inflation figures. Yes it will impact businesses in general and profits will be damaged to some extent. RTN has done a lot to mitigate these headwinds in terms of hedging fuel, rate caps, lease terms and recruitment issues. Just need to wait a bit! The interim's may spark some sustained life into the SP!
bvcxz70 believe you why! Do you have inside knowledge and posting a public board! This government have not indicated yet that they wish to have another way of managing rail services so not sure where your assumption is coming from re future. They need to give notice unless the government cancels contracts, then compensation will be due to FGP.
DVRG will not make a net profit in 2022 imv. The loss, like last year will be caused by amortisation (a) and depreciation (d) both of which are non cash items. The real issue for me, is will they be cash generative after interest payments and tax paid (credit last year of £1m) but before capital expenditure and exceptionals. If they are that will be a good result as cash is king in a growing company. The good thing about affiliate payments for STC, this is almost instant cash to DVRG, is my understanding, which will make cash management easier. Very pleased with the progress DVRG has made to date and confident SP will reflect this in the coming months and years.