An overhaul of the board under Mr McFarlane will see prominent Scottish non-executive directors David Begg, the former transport leader on Edinburgh City Council, and ex-SSE executive Colin Hood step down.
After struggling during the economic downturn due to ill-timed fare rises, FirstGroup's revamped UK bus business saw its first increase in fare-paying passengers for a decade in the year to March 31.
Chief executive Tim O'Toole said: "Glasgow was a real challenge because that was a very challenged area economically and remains so and we have said that we still have great faith in Glasgow as an important market for us."
He said that an overhaul of services in Glasgow, under the SimpliCITY badge, had sent routes back into profit after two years of losses.
Meanwhile, Mr O'Toole said that fare changes in Aberdeen had helped boost passenger numbers.
But he said its East of Scotland bus operation "is the most challenged at the moment".
FirstGroup posted an adjusted pre-tax profit of £111.9 million for the year as disappointing results at its US school bus arm, its largest business, were offset by outperformance elsewhere
FirstGroup had indicated in May, when it conducted a £615m share issue to bolster its debt-laden balance sheet, that it could pay a £50m dividend for the year. It said today it had opted against a pay-out.
"Consideration of the question was driven by the new chairman and he brought his views to bear," Mr O'Toole said. "The board thought the most prudent step was to retain the cash in the business."
Gert Zonneveld, analyst at Panmure Gordon, said: "Progress is being made but it remains a case of jam tomorrow."
Mr O'Toole refused to be drawn on when pay-outs might restart.
"It is not an issue I would want to get in front of," he said. "We announced today three new board members. They will bring all their views to bear."
FirstGroup said that Prof Begg, a non-executive director since 2005, Mr Hood, who has served since 2009, and senior independent director John Sievwright, a former Merrill Lynch banker who has been on the board since 2002, would retire next month.
They will be replaced by easyJet executive Warwick Brady, former Dairy Crest chief Drummond Hall and Imelda Walsh, a former J Sainsbury executive.
Mr McFarlane said: "It is a natural process for directors who cease to become independent to retire and for the board to be refreshed."
Mr O'Toole said: "Our new chairman is Scottish. There is not an attempt not to draw on all the talents available in Scotland. It is also true that we are interested in diversity. We were looking for the best people that have the kind of experiences that are helpful to us given our current challenges."
After succeeding Martin Gilbert in January, Mr McFarlane said he had met FirstGroup's major shareholders.
The former Royal Bank of Scotland director, who overssaw an overhaul at insurer Aviva, said: "It is fair to say that they are very supportive of the group but are disappointed we have not matched this support with appropriate returns."
FirstGroup is shortlisted for seven rail franchises including ScotRail, the Caledonian Sleeper and InterCity East Coast.
It has told investors it would be happy to win two large franchises and one smaller one.
Mr O'Toole warned investors to be calm during the bidding process. "We have to hold our nerve," he said.
Mr O'Toole refused to be drawn on board discussions about Scottish independence. "We are the largest bus company in Scotland and we provide the rail services," he said. "We believe this is a question for the people of Scotland. We believe that regardless of what political structure exists there we can deliver value and we would really prefer not to be part of the debate."