FirstGroup holds divi amid franchise fiasco

Transport company FirstGroup said trading during the first half of the year is in line with company expectations, despite continued economic headwinds.

Underlying pre-tax profit declined 42.4 per cent to £48.7m in the six months to September 30th. The group saw a one off exceptional gain in the previous year on its UK Bus pension scheme.

FirstGroup said it has also decided to hold its dividend payment at the same level as last year following the Department for Transport's (DfT) cancellation of the InterCity West Coast competition, in which FirstGroup had been chosen as the winning bidder.

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DfT officials were forced to scrap the West Coast franchise bidding process following what it described as "unacceptable mistakes" in which three DfT civil servants were suspended.

"As a result of the uncertainty this creates, the board has decided to hold the interim dividend at last year's level, and will consider the appropriate level for the full year dividend in May 2013," it explained.

"By that time, the prospects for our UK Rail division are expected to be clearer, following independent reviews into the cancellation of the West Coast competition and the future of franchising," the group added.

The dividend has been held at 7.62p per share.

Otherwise FirstGroup reaffirmed that it was taking action to reposition its UK Bus business to restore growth. Profit also reduced at its UK Rail unit as a result of the transition to the three-year extension period in First TransPennine Express.

FirstGroup, which carries 2.5bn passengers every year across its bus and rail networks in the UK and its school bus, transit and intercity coach operations in the US and Canada, said it remains focused on improved performance and sustainable growth across the group.

"We are confident that our actions will create a stronger business for the future. While there is still more to do, we are pleased with the progress of the actions we have taken so far," it said in a company statement.

CJ