LONDON (Reuters) - British bus and rail operator FirstGroup abandoned an earlier plan to restart dividends, citing slower progress in the turnaround of its United States school bus unit and the needs of a capital investment programme.
The company said last May it planned to pay out about 50 million pounds in a final dividend for the financial year to the end of March 2014, having scrapped its payout this time last year and for the subsequent interim period.
This time last year, FirstGroup, undertook a 615 million pound rights issue to maintain its credit rating, cut its debt and upgrade its fleet and IT systems, in the wake of the company having lost a lucrative contract to run Britain's West Coast Main Line.
The company did not say on Wednesday when it would reinstate the dividend, adding that it had consulted with major shareholders and was confident of their support.
For the year to March 31, FirstGroup reported a 23 percent rise in annual pre-tax profit to 112 million pounds compared to a Thomson Reuters consensus forecast of 114.7 million pounds from a poll of 14 analysts.
"The group is broadly on track to achieve our medium term targets and, while we are encouraged by progress so far, there remains a significant amount of work ahead," Chief Executive Tim O'Toole said.
The performance of First Student, which operates yellow school bus services, and FirstGroup's Greyhound bus unit were affected by prolonged snow storms and bad winter weather in the U.S. The Scotland-based company warned in April that it would take a 14 million pound hit to annual profits from the weather.
Shares in FirstGroup, which have risen 14 percent over the last six months and have over the last year broadly tracked Britian's midcap index, closed at 132.2 pence on Tuesday.
(Reporting by Sarah Young; editing by James Davey)