Investors do not like write-downs, particularly on goodwill, nor falling profits, especially when your company's share price is at half the level that it was at when you joined.
Having reported the former two for the full-year just ended, First Group boss Tim O'Toole announced his decision to step down.

The transport operator swang deep into the red last year after writing-down the value of various assets on its balance sheet, especially around its Greyhound unit.

Largely due to the "long-term structural challenges" facing Greyhound, such as intensifying competition from airlines, First Group booked a goodwill writedown charge £277.3m.

The company also booked a £106.3m onerous contract provision for the Trans Pennine Express, as a result of management's excessively optimistic assumptions when it bid for the contract.

"[...] Our assessment is that this growth will be short of our bid assumptions due to current market conditions, and we have therefore taken the decision to provide for forecast losses of up to £106.3m over the remaining life of the TPE contract," the company said in a statement.

So despite top line growth of 13.2% to £6,398m on a statutory basis, the company registered a £326.9m loss before tax for the 12 months ending on 31 March, versus £152.6m of profits in the year before.

Statutory earnings per share meanwhile cratered, with the 2017's figure of 9.3p morphing into a loss of 24.6p.

On an adjusted basis, the company fared better, with profits before tax falling from £207.0m last year to £197.0m, for earnings per share 12.3p, which was just a tad below the 12.4p seen in 2017.

However, as Lee Wild at Interactive Investor pointed out, the company's sales were flattered by the positive impact from the start of the South West Rail franchise and an extra week of trading in the 2018 fiscal year at its Road division.

Were it not for that, revenues would have risen by just 1.0% and ajusted operating profits lower by 6.5% at £317m (down by 4.3% at constant currencies).

First Group did manage to cut its debt pile by 15.5% at constant currencies to £1,070m, thanks to SWR, which boosted its net cash inflows for the period from £147.2m to £199m.

Even so, the latest results forced chief executive Tim O'Toole to step down, with Wolfhart Hauser nominated to executive chairman in his place.

The board also decided to do without what Canaccord Genuity's Gert Zonneveld labeled as a "much anticipated" dividend, with shareholders having gone without one since 2012/13.

As well, First Group announced that its finance director Matthew Gregory would take over as chief operating officer.

Commenting on the results, Wild also pointed out how O'Toole had recently rebuffed two approaches from Apollo Global Management, even as the company's shares continued to languish at around half the level they were at when he took over - eights years ago.

Indeed, on 8 May First Group had decided to throw in the towel, backing off from tabling a bid.

"Grim annual results were the final nail in the coffin. [...] A sale of the Greyhound coach business looks increasingly likely after another woeful performance. The threat posed by low-cost airlines is serious, and FirstGroup has done all it can to reverse its decline. Something drastic is needed here, and FirstGroup is short of ideas," Wild said.

"With no chance of a resumption of dividend payments anytime soon, FirstGroup shares offer little of interest to long-suffering shareholders. The new CEO will have their work cut out convincing them otherwise."

For his part, Zonneveld reiterated his 'hold' recommendation and 89p target price for the company's shares.

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