FirstGroup freezes interim dividend
Company counts cost of the West Coast rail franchise fiasco
By CFOWorld.co.uk staff | CFO UK | Published 12:15, 07 November 12
FirstGroup, the commuter transport company, has frozen its interim shareholder dividend following uncertainty surrounding the cancellation of the bidding for the Intercity West Coast rail franchise.
The group had been named as the winning bidder for the route only for tendering process irregularities to surface which led the government to cancel the bids. It also put the entire bidding process for rail routes on hold pending an official review. As a direct consequence, First Group announced on Wednesday that its board has decided to keep the dividend unchanged at 7.62 pence.
The announcement followed a slump in the company’s first half pre-tax profits to September-end. First Group said that despite revenues rising by 2 percent to £3.25 billion, pre-tax profits fell to £8.4 million. The figure represented a dip of 93.4 percent from £127.8 million for the corresponding period last year.
The sharp fall was attributed to a charge for exceptional items and a one-off gain of £73.3 million in 2011 following the restructuring of its UK Bus pension scheme.
FirstGroup chief executive Tim O'Toole said, "In the short term we have to contend with the uncertainty around future rail franchises created by the Department for Transport's decision to cancel the InterCity West Coast contract and pause the current franchise competitions, following its discovery of flaws in the way it conducted its process."
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