FirstGroup

Website: FirstGroup
Index: FTSE 250
EPIC: FGP
Supersector: Travel and Leisure
Sector: Travel and Leisure
Subsector: Travel and Tourism
Market Cap: £1.05B
Payout Frequency: Semi-Annual

FirstGroup Dividend Analysis and Summary

Declared Dividend and Key Dates

Dividend: Interim dividend of 2.2p per share (up from 1.7p in H1 2025)
Ex-dividend date: 27/11/2025
Record date: 28/11/2025
Payment date: 30/12/2025
Total cash outlay: c.£12.0m
Policy/cover: Progressive dividend with c.3x adjusted EPS cover; typical split c.1/3 interim, c.2/3 final

Dividend Policy and Coverage

Policy unchanged: progressive dividend targeting around 3x cover from adjusted earnings.
H1 adjusted EPS rose 16% to 9.9p, comfortably covering the 2.2p interim.
Share buybacks (£50m completed in October; 22m shares repurchased H1) reduce share count, supporting per-share dividends.
Balance sheet headroom: adjusted net debt £207.6m (forecast £125–135m at FY26 year-end) with £454m of undrawn/free cash headroom.

Analysis: Sustainability and Growth Outlook

Earnings support: Adjusted operating profit edged up; adjusted EPS +16% YoY. Guidance for modest EPS growth in FY26 and to at least maintain in FY27 underpins a progressive payout.
Cash generation: H1 free cash outflow of £(35.6)m reflects accelerated Bus electrification capex; management expects ~£125m cash inflow from DfT TOCs over three years and a step-down in Bus net capex to ~£100m p.a. in the short/medium term, improving dividend cash cover.
Capital allocation: Clear framework prioritising growth capex (notably electrification), a progressive dividend at ~3x cover, and returning surplus cash (buybacks). Near-term investment intensity is elevated but manageable given liquidity and leverage.

Structural and Strategic Developments Relevant to Dividends

First Bus London acquisition (Feb 2025) integrating well; contributes scale and relatively stable London margins (~6–7%).
Business restructuring: ~£6m of £15m annualised savings delivered in H1, supporting future margins and dividend capacity.
Rail transition: SWR moved to public ownership; more NRCs to transfer, reducing fee income but expected to deliver ~£125m cash inflow over three years. Strategy pivot to open access growth (capital-light rolling-stock leases) aims to diversify and sustain earnings.
Pensions: Bus section valuation complete; £20m cash returned post-period, with ~£65m in escrow until 2030 valuations—reduces pension funding uncertainty.
Shareholder returns: £76m returned in H1 (final FY25 dividend plus buybacks), evidencing commitment to distributions alongside growth investment.

Risks and Flags for Dividend Stability

High capex for bus electrification (FY26 net capex ~£180m) weighs on near-term free cash flow; reliant on timely government co-funding (ZEBRA).
Operating headwinds: softer commercial bus volumes, fare cap transition, and higher employer NI (~£16m Group impact) pressure margins.
Rail reconfiguration risk: end of NRC fees and mobilisation costs (~£6m) for new open access services introduce execution risk and earnings variability, partly offset by capital-light leases and growth runway.
Policy/regulatory: UK bus franchising expansion and rail reforms may alter revenue models; management is actively bidding and repositioning, but policy risk remains.
Leases: significant IFRS 16 lease liabilities (mainly rail rolling stock) do not affect adjusted net debt but are relevant to total financial commitments.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
03/07/2025	08/08/2025	Final	4.80p	GBX
27/11/2025	30/12/2025	Interim	2.2000p	GBX

Total (Annual Dividends Per Share): 7.00p

Dividend Yield = Annual Dividends Per Share (7.00p) ÷ Share Price (188.2p) = 3.72%

Ex Dividend Date	Payment Date	Type	Amount	Currency
27/11/2025	30/12/2025	Interim	2.2000p	GBX
03/07/2025	08/08/2025	Final	4.80p	GBX
28/11/2024	31/12/2024	Interim	1.70p	GBX
18/07/2024	23/08/2024	Final	4.00p	GBX
30/11/2023	03/01/2024	Interim	1.50p	GBX
13/07/2023	18/08/2023	Final	2.90p	GBX
17/11/2022	23/12/2022	Interim	0.90p	GBX
14/07/2022	19/08/2022	Final	1.10p	GBX
09/01/2013	07/02/2013	Interim	7.62p	GBX

Year	Interim	Final	Currency	Total	Change
2024	1.700	4.000	GBX	5.700	29.540
2023	1.500	2.900	GBX	4.400	120.000
2022	0.900	1.100	GBX	2.000	-73.750
2013	7.620		GBX	7.620

Number of Shares:

Payment	Paid	Amount
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