First Group cuts 2013 final dividend to zero

DividendMax Ltd.

First Group cuts 2013 final dividend to zero




* Overall trading for the Group in line with management's expectations

* Proposed fully underwritten £615m capital raising transaction announced
separately today to remove the constraints of the current balance sheet and
enable the business to continue to invest for future returns, while
reducing leverage

* No final dividend proposed. New progressive dividend policy announced

* First Student - recovery plan on track, building on progress made from a
more efficient operating model and uniform practices

* First Transit - strong growth underpinned by good contract wins, disposal
of First Support Services consistent with our strategy to focus on core

* Greyhound - margin expansion despite economic headwinds, further expansion
of Greyhound Express to new markets

* UK Bus - completed portfolio reshaping with c.£100m of disposals, including
sale of London depots announced in April. Comprehensive programme to
restore performance and increase revenue and patronage delivering early
positive results

* UK Rail - continued strong performance, franchise extensions currently
being negotiated and positioned for resumption of franchising process

* Cash flow in line with expectations

Continuing operations:     2013                2012           Change

Revenue                        £6,900.9m         £6,678.7m     +3.3%

- EBITDA3                     £667.0m            £742.9m        -10.2%

- operating profit           £335.4m             £428.5m       -21.7%

- profit before tax          £172.4m            £271.4m        -36.5%

- basic EPS                   26.9p                 40.0p            -32.7%


- operating profit          £205.7m             £448.0m        -54.1%

- profit before tax         £37.2m               £279.9m        -86.7%

- basic EPS                   7.3p                    42.7p            -82.9%

Final dividend                Nil                      16.05p

Net debt5                   £1,979.1m           £1,837.5m      +7.7%

Commenting, FirstGroup's Chief Executive, Tim O'Toole said:

"With a fundamentally attractive portfolio of businesses and leading positions
in each of our markets, we are focused on delivering outstanding services to
our customers and communities, and harnessing the significant opportunities we
have to create long term sustainable value. We have delivered a resilient
trading performance in line with our expectations and have also achieved most
of the other goals we had set ourselves during the year, including our c.£100m
UK Bus disposal programme and divesting other non-core assets including First
Support Services.

"The real long term opportunity for us, however, arises from our business
recovery programmes, particularly in First Student and UK Bus. We have clear
plans in place for all of our divisions, and while there remains significant
work to be done, our confidence continues to grow as a result of the progress
to date.

"The proposed c.£615m capital raising transaction we are announcing separately
today will remove the constraints from our balance sheet and enhance our
ability to invest in our businesses going forward. We plan to invest around

£1.6 billion across our five divisions over the next four years to underpin
growth and return our businesses to our target levels of profitability. Through
these actions, combined with our scale and expertise, we are positioning the
business for improved growth and returning it to a profile of consistent
returns and cash generation.

"We are targeting an appropriate, progressive and sustainable dividend policy
with cover of 2.0 to 2.5x in the medium term. In the short term the Board
proposes that no final dividend will be paid in respect of the year to 31 March
2013, nor an interim dividend for the year to 31 March 2014. Payments will
recommence with a final dividend for the year to 31 March 2014, subject to
performance in line with expectations, as a transition to re-establishing a
progressive dividend policy thereafter. While the exact quantum will be
determined at that time, the Board's intent is to pay a transitional final
dividend of up to £50m in the year to 31 March 2014.

"Martin Gilbert has today announced his intention to stand down as Chairman,
once a successor has been appointed. On behalf of the Board and our 120,000
employees, I would like to pay tribute to Martin and thank him for his
outstanding contribution to the company. As Chairman and founder his vision and
drive have led the transformation of the Group and under his stewardship the
business has grown to become one of the world's leading transport operators."

Companies mentioned