retutning money under the radar27 Oct 2021 14:53
I do think a 41p special dividend would have been the simple way to do this, at which point, people/the market can decide whether it rises/falls prior to, and subsequent to payment, and buy /sell in the market.
I think this has been done in this convoluted confusing way because of political considerations. During covid, much of Firsts staff have effectively been paid by the government. To then pay out 41p, having been bankrolled would have stood out and be an easy target for political opponents and unions ("Shareholders profiteering from government subsidy" etc).
This way profiteering headlines are avoided, which is paramount to FGP as effectively they are an arm of Govt now, without using the word nationalisation, and as a group, the modern management contracts of Govt provides certainty, and whilst this limits upside (where has that been in the last 5 years?), it totally removes downside/risk. In affect this will turn FGP into an infrastructure play, long term visibility, fixed costs, with a low but predictable margin on large turnover.
Personally, i think, over a 2 year frame, this will throw off money, because of its quasi govt arm/infrastructure nature and because it has been so battered for so long. The trajectory, environmentally, governmentally means its being paid to do a job, no downside but KPI achievement upside. The removal of the (previously ringfenced) train franchise bonds, will release considerable sums (compared to current market value), that in my opinion could equal 'this' £500 million. If, IF, they slimline their bloated duplicating management teams/functions/offices, they could release considerable costs to translate to profit - and the 'Williams-Shapps Plan for Rail' may be the catalyst that creates it (requiring cooperation rather than separation of franchises). [albeit i dont think the mgmt have the skillset to do themselves whilst enjoying the gravy train].
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