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FirstGroup PLC on Tuesday posted a more than quintupled profit for its financial year, as it announced it signed an extension of its contract to operate Great Western Railway.
Pretax profit in the financial year that ended March 26 jumped to £654.1 million from £115.8 million a year ago, the Aberdeen, Scotland-based transport provider reported.
Revenue fell by 18% to £5.59 billion from £6.84 billion, but profit was still up as FirstGroup made £2.32 billion in net proceeds from selling businesses, compared to nothing a year ago.
In July 2021, it sold First Student and First Transit to Stockholm-based EQT Infrastructure, an asset of investment firm EQT Group, for net disposal proceeds of $3.12 billion. Gain on sale of the division before tax was £501.1 million, FirstGroup said on Tuesday. In October, it sold Greyhound Lines for $172 million to a subsidiary of Munich-based FlixMobility GmbH.
FirstGroup proposed a 1.1 pence final dividend per share, compared to none a year ago.
‘Current trading is in line with our expectations, with the group expected to make significant further progress in financial year 2023,’ FirstGroup said. The company aims for a ‘principally transition of bus fleet to 100% zero emissions by 2035’.
Meanwhile, FirstGroup said it signed a new three-year contract for Great Western Railway, starting June 26. The National Rail contract with the Department for Transport will earn GWR an annual fixed management fee of £6.9 million. DfT has the option to extend the contract to June 2028 from its current expiry date of June 2025.
Under the contract, GWR has ‘the opportunity to earn an additional performance-based fee of up to £17.8 million per annum,’ FirstGroup added. The firm's contingent capital for the contract is £13 million.
Late last week, FirstGroup said it had rejected a possible takeover offer from I Squared Capital Advisors (UK) LLP, saying the firm cash component undervalues the company and the contingent component doesn't give shareholders enough certainty.
Late last month, FirstGroup said it had received a series of offers from I Squared, the last being 118 pence per share in cash, plus 45.6p more contingent on the proceeds of FirstGroup's recent disposals of its First Transit and Greyhound businesses in the US.
FirstGroup shares were up 1.7% at 134.99p on Tuesday morning in London.
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