Firstgroup chair defends board after AGM rebellion

● CEO and other directors suffer sizeable opposition ● Transport firm expects return to profit in first half

Transport giant Firstgroup’s chairman defended the company’s board after rebel shareholders voted against thereappointment of chief executive Matthew Gregory at its AGM yesterday.

The company, which has been locked in a dispute with key shareholders including Coast Capital over the future of its North American business, saw almost 30 per cent of votes cast against Gregory with several other directors also seeing sizeable opposition.

The results were published after an up date on trading, which showed the group had delivered a stronger-thanexpected financial performance so far this year given the impact of the pandemic. Its figures show passengers are returning to buses faster than they are to trains, with volumes bouncing back to around 50 per cent of prepandemic levels last week. The company said it was encouraged by recent activity levels, particularly since schools returned.

But chairman David Martin said he was disappointed that some investors voted against there-appointment of Gre - gory.

“We are committed to continuing a constructive and open dialogue on this and all other matters with our shareholders,” he said, adding he was confident that the board has the“necessary mix of skills, experience and knowledge to unlock material value through the sale of our North American businesses”.

In its trading update, FirstGroups aid its trainsdivision has only seen a modest increase during the summer and is only attracting around 30 per cent of its pre-pandemic customers on average.

However, the group expects to report a“small adjusted operating profit” for the first half of the financial year. It said it is “impossible to predict with certainty” what medium-term impacts Covid-19 might have, but the pandemic has delayed plans to sell off its business in North America.

The board is still focused on the sale, which it says can “unlock material value,” and added that potential buyers have shown significant interest. But the pandemic has affected the speed with which the process can be concluded, Firstgroup said.

The Nor th American business is also starting to bounce back from Covid-19 with its transit division operating around 67 percent of its prepandemic services, having dropped to 60 per cent during the low points of the outbreak, and is making about 80 to 85 per cent of the revenue it had expected before the crisis.

AJ Bell’s investment director Russ Mould said that although First Group’ s performance in recent months had been stronger than expected, he stressed this had been underwritten by state support.

“This situation will not be sustainable in the longer term,” he cautioned.