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FirstGroup keeps dividend flat after rail fiasco
November 7, 2012 / 7:46 AM / 5 years ago

FirstGroup keeps dividend flat after rail fiasco

LONDON (Reuters) - British transport firm FirstGroup (FGP.L) said it would hold the interim dividend at last year’s level due to uncertainty caused by the botched award of the UK’s West Coast main line franchise.

The bus and rail operator on Wednesday said its underlying pretax profit fell 42.4 percent to 48.7 million pounds ($77.83 million) in the six months to the end of September, largely due to the absence of a one-off exceptional gain made this time last year on its UK Bus pension scheme.

Revenues rose 2.6 percent to 3.25 billion pounds.

Britain last month tore up a deal to award the country’s West Coast Main Line to FirstGroup, in a humiliating U-turn that raised doubts about the government’s handling of the UK’s privatised railways.

Ministers froze the award of other rail franchise competitions after the Department for Transport (DfT) said that “completely unacceptable” flaws had been uncovered in its handling of bids to run the West Coast Main Line, a jewel in the crown of the rail network linking London and Scotland.

Incumbent Virgin Trains, a venture between Richard Branson’s Virgin Group and Stagecoach (SGC.L), will continue operating the service for a further nine to 13 months from December, while the DfT plans a competition for an interim agreement.

“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,” the company, which held the interim dividend at 7.62 pence per share, said in a statement.

“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.”

Shares in FirstGroup, which have fallen 40 percent in 2012 - largely because of the West Coast route fiasco - closed at 205.3 pence on Tuesday, valuing the business at 990 million pounds.

($1 = 0.6257 British pounds)

Reporting by Rhys Jones

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