Aberdeen-based bus and rail giant FirstGroup said on Tuesday it signed an extension of its contract to operate Great Western Railway (GWR) — as it announced its profit before tax soared to £654.1 million from £115.8 million, boosted by profit on the sale of North American businesses.
FirstGroup said on June 9 its board unanimously rejected a £1.23 billion cash and shares takeover approach from US private equity group I Squared Capital Advisors (UK) LLP.
The Aberdeen-headquartered group said on Tuesday its total revenue fell to £5.588 billion £6.844 billion for the year ended March 26, 2022 “principally reflecting the stub year contributions from discontinued operations.”
Adjusted operating profit rose to £226.8 million from £220.2 million a year earlier.
Statutory operating profit from discontinued operations of £683.3 million included the gains on the sale of North American businesses First Student, First Transit and Greyhound US.
On dividends, the Aberdeen group said: “As a result of the recent corporate activity, the group is in a strong financial position …
“The board is therefore proposing that regular, progressive dividends begin with a final dividend of 1.1p per share for FY 2022, in accordance with our previously articulated policy of an annual payout around three times covered by group adjusted attributable profit.”
The new GWR contract starts on June 26, 2022, and has a core three-year term to June 21, 2025, with an option for the Department for Transport (DfT) to extend by up to three further years to June 2028.
On current trading and FY 2023 outlook, FirstGroup said current trading is in line with expectations, with First Bus passenger volume recently at 76% of the equivalent 2019 period.
FirstGroup shares have risen about 66% over the past 12 months to around £1.35 to give the firm a stock market value of about £1 billion.
FirstGroup executive chairman David Martin said on Tuesday: “We have delivered on our commitments this year to refocus the business, de-risk the balance sheet and unlock value for shareholders.
“As a cash generative business with a strong balance sheet, FirstGroup is well placed to invest in the services our passengers want, to sustain our path to a zero-emission bus fleet, and to actively consider additional value creation opportunities to leverage our market leading public transport expertise.
“The board’s confidence in the prospects for the Group is reflected in the decision to commence dividend payments.”
FirstGroup CEO Graham Sutherland said: “The transformed group has momentum and we expect to make significant further progress in the year to March 2023.
“With leading positions in bus and rail, a strong balance sheet and a clear purpose, FirstGroup has many opportunities ahead to deliver sustainable shareholder value creation while delivering the vital services that are key to achieving society’s sustainability and economic goals.”