- Termination sums agreed for UK Rail contracts after franchise model scrapping
- The group remains comfortably within its covenant limits
Visibility over revenues has been in acute short supply for transport providers as passenger numbers collapsed in the face of the pandemic. So perhaps FirstGroup (FGP) investors should be grateful for the news that the First Rail business has agreed franchise termination sums with the Department for Transport of £33.2m for South Western Railway and nil for Avanti, following the scrapping of the rail franchise model. It is negotiating new contracts, which would last until April 2023 for SWR, and April 2026 for Avanti.
However, no further concrete progress has been made regarding the sale of the Greyhound business, with management remaining in discussions with interested parties and cutting capacity in response to the fall in demand.
At 1.5 times adjusted cash profits, net debt was comfortably below a covenant limit multiple of 3.75. Consensus forecasts are for a return to earnings growth in 2022, at 7.84p a share. Hold.
Last IC view: Hold, 49.2p, 8 Jul 2020
FIRST GROUP (FGP) | ||||
ORD PRICE: | 69p | MARKET VALUE: | £ 836m | |
TOUCH: | 68.45-68.65p | 12-MONTH HIGH: | 134p | LOW: 25p |
DIVIDEND YIELD: | Nil | PE RATIO: | NA | |
NET ASSET VALUE: | 85p* | NET DEBT: | £2.98bn |
Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2019 | 3.53 | -187 | -14.3 | nil |
2020 | 3.10 | -100 | -8.3 | nil |
% change | -12 | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £1.68bn, or 138p a share |