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FirstGroup may cease trading

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ursaminortaur
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FirstGroup may cease trading

#324656

Postby ursaminortaur » July 8th, 2020, 6:36 pm

I think some here may have FirstGroup in their HYP

https://www.lemonfool.co.uk/viewtopic.php?p=324654#p324654


Moderator Message:
Web links changed based on readers' feedback and reports. -- MDW1954

kempiejon
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Re: FirstGroup may cease trading

#324663

Postby kempiejon » July 8th, 2020, 6:55 pm


dealtn
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Re: FirstGroup may cease trading

#324664

Postby dealtn » July 8th, 2020, 6:55 pm

ursaminortaur wrote:I think some here may have FirstGroup in their HYP

https://www.lemonfool.co.uk/viewtopic.php?f=15&t=24305


That link might not work as it goes to a post in the wrong place. Hopefully a mod will be able to correct but if not

viewtopic.php?f=94&t=16331

I think this will work as the location of this company's news.

kempiejon
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Re: FirstGroup may cease trading

#324666

Postby kempiejon » July 8th, 2020, 6:57 pm


ursaminortaur
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Re: FirstGroup may cease trading

#324675

Postby ursaminortaur » July 8th, 2020, 7:40 pm

kempiejon wrote:


actually here viewtopic.php?p=324654#p324654


Thanks kempiejon, I edited the link in the original post on this thread and somehow managed to link back to itself rather than where you have linked to. Thanks again for correcting it.

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FirstGroup final results, with 'going concern' uncertainty

#324685

Postby Gengulphus » July 8th, 2020, 8:27 pm

As people have spotted, the link in the OP is clearly supposed to have pointed to a similarly-named thread on the Company News board rather than to this thread itself. I've made a report asking for this to be corrected. (It may take some time to sort this out fully, because I've since noticed that the thread on the Company News board has also been reported by someone else, at a guess for failing to adhere to that board's one-thread-per-company rules...)

The Company News thread links to a news story in the Guardian and quotes it as saying that "The company said on Wednesday there was “a material uncertainty” that may cast significant doubt on its continuing ability to operate, as it reported losses of just under £300m for the year to the end of March." That indicated that the company almost certainly released its final results RNS today, and on the principle of going to the horse's mouth, I looked and found that it did indeed do so:

https://investegate.co.uk/firstgroup-pl ... 0000P3C00/

The crucial quote from those results that looks to have led to the Guardian story:

"Material Uncertainty as to going concern

The Directors noted that the risks set out below indicate that a material uncertainty exists that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

Material uncertainty relates to:

* the uncertainty regarding the levels of fiscal financial and contractual support which may be provided beyond the period for which that funding and contractual support is currently being provided;
* whether passenger volumes recover to the levels necessary to sustain the business without the current fiscal financial and contractual support;
* the ability of the Group to obtain covenant waivers from debt providers if required;
* the ability of the Group to draw down on c. £550m of the currently available but uncommitted facilities throughout the going concern period if required; and
* the timing of cash flows, including movements in working capital and the timing of receipts of contractual and fiscal support that may impact debt levels at covenant test dates.

Going Concern statement

Based on their review of the financial forecasts and having regard to the risks and uncertainties to which the Group is exposed, (including the material uncertainty referred to above) the Directors believe that the Company and the Group have adequate resources to continue in operational existence for the twelve-month period from the date on which the financial statements were approved. Accordingly, the financial statements have been prepared on a going concern basis.
"

It doesn't sound good - they're obviously still hoping to keep the company going, but even with as much optimism as they can plausibly muster, they're having to admit that it's in doubt...

On a couple of 'board admin' details, I've chosen a different title for this post than the OP's title, as I think that the fact that the company has released its final results is also headline-worthy, and it's worth noting that although FirstGroup hasn't paid a dividend since its interim in early 2013, it was a reasonably popular HYP share for some years up to 2012. I was tempted by it myself, but never actually bought (apart from a tiny holding for the 'scale model' of GDHYP) - I can remember that its most attractive feature was excellent past dividend growth right through the 2003 bear market and the 2008/9 financial crisis (which I've just checked: a steady rise from 6.6p in 1998 to 23.67p in 2012, which is a dividend CAGR of 9.55%), but I don't remember what made me steer clear! IIRC, the problem that led to its fairly abrupt cessation of dividends was going for one or more rail franchises that were awarded to it but then withdrawn, though there have clearly been others that have prevented it ever recovering from that. Anyway, HYPers who have started in the last 8 years or so will probably never have seen it as a remotely plausible candidate, but it is a share some HYPs have bought in the past.

Along with Carillion, it is one of the shares that has led me to regard dependence on Government franchises/contracts/etc as a dividend danger sign - a lesson that may well get reinforced in the next few months to years...

Gengulphus


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