FIRSTGROUP has seen off a mini-revolt from shareholders over the reappointment of chairman David Martin to its board as it reported bus passenger volumes had returned to 65 per cent of pre-pandemic levels in recent weeks.
Around 20 per cent of the voted shares were cast against a resolution to re-elect Mr Martin as a director at the transport giant’s annual meeting yesterday.
Mr Martin has now taken over as interim executive chairman of the Aberdeen-based company following the AGM, after which Matthew Gregory stepped down as chief executive. The search for his successor is under way.
Non-executive directors Martha Poulter and Steve Gunning also departed after the meeting.
Mr Martin, a former chief executive of bus giant Arriva, was brought in as chairman in 2019, amid a campaign for change led by US activist investor Coast Capital. He was not the only director to endure resistance from investors yesterday, with around 20% and 18% of voted shares lodged against the re-appointment of Warwick Brady and Julia Steyn as directors. More than 18% of voted shares went against a resolution authorising the company to make political donations and incur political expenditure.
And the AGM saw revolt over resolutions to authorise the directors to disapply pre-emption rights, and disapply pre-emption rights for acquisitions or other capital investments. Those resolutions saw 16.2% and 16.8% of the voted shares go against them.
All resolutions were passed.
Yesterday’s meeting came amid continuing upheaval at FirstGroup, which is bidding to rebuild passenger volumes following the huge disruption brought by the pandemic.
The company has also been consolidating its operations. In April, it agreed a deal to sell its First Student and First Transit businesses in the US for around $4.6 billion, while its Greyhound inter-city coach business across the Atlantic remains up for sale.
FirstGroup announced yesterday that it will return £500m to shareholders following the sale of First Student and First Transit, which have been acquired by private equity group EQT Infrastructure. It said that a tender offer had been identified as the “optimal way to return such a significant amount in a short space of time, while giving shareholders who wish to retain their current investment in FirstGroup the option to do so.”
Details of the tender offer, the implementation of which requires shareholder approval, will be issued to investors in due course, the company said. It expects all Scottish, UK and US shareholders will be able to participate, as long as they have been on the register at a certain date which will be advised in the forthcoming circular.
First Bus said passenger volumes have recovered to 65% of pre-pandemic levels and that it is trading in line with expectations for the current year. It expects passenger volumes to increase further as the autumn school and university terms get under way.
The company noted the delivery of local bus services across England have since September been supported by the Department for Transport’s £226.5m bus recovery funding package, which was announced in July. The scheme, which allocates grants to regional operators based on mileage and volumes, is in place until April.
On rail, the company noted that the DfT has extended the current Great Western Railway and West Coast Partnership, incorporating Avanti, agreements by six months to June and October 2022. It added that the department has also signalled that the West Coast Partnership’s national rail contract, which will follow the current agreement, could last up to ten years to October 2032. GWR’s could last up to six years to June 2028.
Mr Martin said in a statement: “Trading is in line with our expectations year to date, and we continue to support our passengers and other stakeholders as travel patterns evolve. While we complete the search for a new chief executive, my focus is on ensuring we continue to drive value from our strong positions in UK bus and rail, progress our plans to resolve our non-core Greyhound operation and complete the return of value to our shareholders following the sale of the North American contract businesses.
“The vital role of public transport is clear and the policy backdrop has never been more supportive.
“With a well-capitalised balance sheet and an operating model that will support an attractive dividend for shareholders commencing in 2022, I am confident that FirstGroup is well-placed to deliver sustainable value creation as a focused UK public transport leader.”
Shares closed up 3.24% at 89.3p.