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MARKET REPORT: First Group’s £500m to boost to investors

First Group, one of the UK’s largest train and bus operators, has confirmed plans to hand back £500million to shareholders.

In a trading update ahead of its AGM, the Aberdeen-based firm, which runs four rail franchises including Avanti West Coast and around a fifth of local bus services, said it will plan to return as much of the cash as possible by buying back shares, with any remaining sum to be paid through a special dividend. 

The bumper payout was first announced in July after the company raked in £2.3billion from the sale of its US transport and school bus businesses.

All aboard: First Group, which runs four rail franchises, has confirmed plans to hand back half a billion pounds to shareholders

First also said the number of passengers riding its buses had reached 65pc of pre-pandemic levels in recent weeks, a figure it expected to rise further as schools and universities returned for the autumn term. It added that overall trading in the year to date had been in line with expectations.

‘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 First Group is well-placed to deliver sustainable value creation,’ said chairman David Martin.

Martin might be optimistic about the company’s prospects, but his own were put into sharp focus by the AGM results.

Stock Watch – BATM Advanced Communications

BATM Advanced Communications jumped after securing the first customer for its Edgility operating system (OS).

Edgility OS is a network function virtualisation system, which is designed to make computer networks faster and cheaper to run by reducing the amount of space and power needed.

The deal with Mexican building materials firm CEMEX is expected to be worth around £1.4million in revenue over five years, while chief executive Zvi Marom added that the contract represented ‘a key milestone’. 

As a result, BATM shares surged 7.8 per cent, or 6.8p, to 93.8p.  

Just over 20 per cent of votes cast were against his re-election to the board, while board director Warwick Brady had the same pushback. 

The votes are not binding – but follow a campaign by its largest investor, activist group Coast Capital, which believes the two are ill-suited to the company.

First Group shares rose 3.2 per cent, or 2.8p, to 89.3p.

The FTSE 100 climbed 0.6 per cent, or 39.23 points, to 7098.43 during the session, while the FTSE 250 added 0.2 per cent, or 42.17 points, to 23775.73. 

The mood seemed positive, however, the outlook was bleaker among professionals in a Deutsche Bank survey, 58 per cent of whom expected stock markets to fall between 5 per cent and 10 per cent before the end of the year, while 10 per cent predicted the drop could be even bigger.

Metal markets were also in focus as prices of aluminium hit a 13-year high of $3,000 (£2,171) a tonne as China tightened output controls on the metal, which is used to make drinks cans and aircraft parts. 

A military coup in Guinea has also raised concerns about the availability of bauxite, a key ingredient in aluminium production.

Meanwhile, oil prices climbed to their highest levels since late July, with Brent crude rising 0.7 per cent to more than $73 a barrel as the damage from Hurricane Ida continued to dent US production.

Oil major BP was up 2.3 per cent, or 6.65p, at 302.3p while rival Shell rose 2.2 per cent, or 31.8p, to 1456.6p.

Abcam, which supplies research tools to scientists, reported that it had swung to a £10.3million profit in the six months to the end of June from a £16.1million loss in the same period last year as lab activity continued to recover to pre-pandemic levels. 

However, the shares dropped 3.2 per cent, or 48p, to 1470p as the company warned foreign exchange headwinds were expected to weigh on revenue growth going forward.

Podcast network Audioboom slumped 3.5 per cent, or 30p, to 830p after private equity firm All Active Asset Capital withdrew its takeover offer, saying the company’s management had ‘ignored the wishes of shareholders’ by not engaging with the proposal.

Audioboom itself issued an upbeat trading update, saying revenues for 2021 will be significantly ahead of previous expectations.

In the risers, FTSE 250 exhibition organiser Ascential ticked up 0.9 per cent, or 3.6p to 417.4p as it said it had purchased Onespace, a company that helps brands increase sales online.

Logistics firm Wincanton rose 0.5 per cent, or 2p, to 384p as it unveiled plans to buy Cygnia Logistics, a provider of supply chain services for the likes of Brewdog, Moonpig and Molton Brown, for £23.9million.

Read more at DailyMail.co.uk