FirstGroup hands £500m to shareholders as trading remains on track

Shares in the Aberdeen-based company rose on Monday morning.

Avanti West Coast operator FirstGroup has said trading has been on track (Avanti West Coast/PA) (PA Media)

Transport giant FirstGroup said recent trading has been on track as it revealed plans to hand £500 million back to shareholders.

Shares in the Aberdeen-based company rose after it revealed it will return the cash to investors as part of a tender offer after selling its First Student and First Transit businesses.

In an update on Monday, FirstGroup chairman David Martin also said that trading has been “in line with our expectations year to date” as the firm continues its post-Covid recovery.

It said bus passenger volumes have reached 65% of pre-pandemic levels on average in recent weeks, with this expected to increase further amid the return of students to schools and universities.

I am confident that FirstGroup is well-placed to deliver sustainable value creation as a focused UK public transport leader

David Martin, FirstGroup

The update came ahead of the company’s annual general meeting, where chief executive Matthew Gregory will step down from his role.

His departure came just a day after Coast Capital, the group’s biggest shareholder, called for his resignation.

Mr Martin said: “While we complete the search for a new chief executive, my focus is on ensuring we continue to drive value from our strong positions in UK bus and rail, progress our plans to resolve our non-core Greyhound operation and complete the return of value to our shareholders following the sale of the North American contract businesses.

“The vital role of public transport is clear and the policy backdrop has never been more supportive.

“With a well-capitalised balance sheet and an operating model that will support an attractive dividend for shareholders commencing in 2022, I am confident that FirstGroup is well-placed to deliver sustainable value creation as a focused UK public transport leader.”

Shares in FirstGroup were 3.3% higher at 89.35p in early trading on Monday.