First Group profits from virus
First Group is the company that operates most bus services in Somerset on behalf of Somerset County Council.
On 11th March, FirstGroup Chairman David Martin told investors that, “At the moment, in my experience, this is one of the most exciting times, with potentially real deliverables there and money standing behind it.”
Today RMT General Secretary Mick Cash suggested “FirstGroup executives are crowing over shareholders’ payouts for this year, all ultimately courtesy of the tax payer.” This following the announcement that the company “is set to benefit from millions in taxpayers’ cash to prop up its bus business on top of being bailed out by the government on its rail operations, including a new direct award contract for the Great Western Route.”
We should note that this is a matter for First Group not Somerset County Council who have no direct input into how the company operates and rewards its shareholders.
While banks have deferred dividend payments the RMT assert that current plans for First Group appear to be different. As the First Group Chairman put it “maximising shareholder value and providing the ability to create substantial returns to shareholders in the short term, or within the second half of this year.”
Of course a lot has happened since March 11.
When we checked the First Group “financial calendar” this morning no dividend dates had been set for the next 12 months. The company, which last paid a dividend in 2013, may yet decide it is politic not to pay dividends even if it finds it can afford to.
I have no affiliation to First Group, but if the quotes from the Chairman were made in a statement published on 11th March then it seems unfair to assume this is still the case. When reporting it would be fairer to ask the Company for their current position; as we know a lot has changed in the world since early March. If the Company is paying dividends they won’t be profits from the virus, they will have been earned in the previous financial year. The article is based on the content of a press release by the RMT union dated 3rd April which itself spins the substance of the story using a mixed up timeline of statements to create the narrative that suits their position. Original press release: https://www.rmt.org.uk/news/rmt-appalled-at-bus-and-rail-giant-firstgroup-plans/
We think the RMT raise a fair point. We have made it clear in the article that as of today there is no proposed dividend on the financial calendar. We also point out it is 7 years since the company last paid a dividend.
There is no denying the fact that a lot has changed since 11th March. A perfectly valid observation.
But it is also true that First Group have chosen not to moderate their position or make any moves to alter the expectations of shareholders. They are duty bound by the rules of the stock exchange to do so if their position has changed. The fact they have not done so in the current circumstances, is unfortunate but also speaks volumes.