The Aberdeen-headquartered transport giant said Matthew Gregory will leave after the group’s annual general meeting on September 13.
The news comes just a day after the firm’s largest shareholder, New York-based hedge fund Coast Capital, called for Gregory to resign after it said the £3.3 billion sale of First Student and First Transit in the US was too cheap and poorly timed at the peak of pandemic disruption.
Chairman David Martin – a former chief executive of rival transport group Arriva – will become First’s interim executive chairman.
Gregory said: “Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities.”
Martin added: “On behalf of the board I would like to thank Matthew for all that he has achieved and wish him every success for the future.”
Just over six in ten shareholder votes were in favour of the deal to offload the US divisions in May following opposition from the group’s two biggest shareholders. Although enough for the sale to go through, the vote was far from an endorsement of the plan.
First has tried to appease shareholders by announcing it will return £500 million to them from the sale of the US school bus and transit divisions. But this was not enough to win over disgruntled Coast.
The announcement of Gregory’s imminent departure came as the group revealed that adjusted annual pre-tax profits had fallen to £39.4 million from £109.9m previously after a tough year for public transport amid the pandemic.
The firm said it was “encouraged” by improving demand for bus travel as restrictions ease, with passenger numbers now at about 60 per cent of pre-pandemic levels.
On a statutory basis, the group swung to a pre-tax profit of £115.8m in the year to March 27 from losses of £299.6m the previous year.
It confirmed that plans to sell its Greyhound coach business in the US continued, but noted that the sale had been impacted as the division has taken a knock from the pandemic.
Martin told investors: “This has been a very active and significant year in the group’s evolution. We achieved the key strategic objective, set out when I joined as chairman in 2019, to unlock value through the sale of our US contract businesses.
“Within the context of a proactive and supportive government framework for public transport and the transition to net zero, we have created a focused and strong business with a bright future.
“Built on a solid foundation of a well-capitalised balance sheet and a new lower risk model, the ongoing group will be cash generative and support a return to shareholder dividends.”
Gregory added: “In this landmark year FirstGroup has more than risen to its challenges. We have delivered on our strategic objectives, protected our financial stability, and supported our communities with essential services while helping to shape the future of public transport in the UK.”