(Alliance News) - FirstGroup PLC on Thursday increased its planned payout to investors to GBP500 million from GBP365 million, after receiving more than expected from the sale of two US units and as the earnings outlook improves.
Shares in the FTSE 250-listed public transport operator were up 3.4% to 82.25 pence in London late Thursday morning.
The shareholder return, scheduled for the autumn, will now be worth around 41 pence per share, up from the previous estimate of 30p per share, the company said. FirstGroup had promised to distribute cash to investors after selling the First Student and First Transit businesses to EQT Infrastructure.
The Aberdeen-based company said it received USD3.12 billion initial net proceeds for the transaction completed on Wednesday - USD58 million more than expected, due to adjustments for working capital and debt.
Other reasons for the increased payout are "improving cash flow expectations...as a result of further easing of pandemic restrictions in our core UK bus and rail markets", and UK rail contract termination fees agreed in May, which were GBP50 million lower than expected.
Chief Executive Matthew Gregory said: "We have delivered this transformational sale which resolves the Group's long-standing legacy liabilities, puts the group in a strong position to benefit from its many opportunities, and releases GBP500 million of value to return to shareholders."
By Ivan Edwards; ivanedwards@alliancenews.com
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Firstgroup (FGP)