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20 April 2004
The Herald
Stagecoach founders share 65m as group returns cash

STAGECOACH founders Brian Souter and Ann Gloag can look forward to a 65m pay day after the company unveiled plans to hand back up to 250m of surplus cash to shareholders.
The sibling tycoons, who jointly own 26% of the Perth-based transport giant, will be entitled to that sum as their share of a "pro rata" return of capital.
Souter, who stepped back into the chief executive's post at Stagecoach last year, is in line to pick up 37m, while Ann Gloag will get 28m. The duo are already among Scotland's wealthiest individuals, with a joint fortune estimated at 330m.
The announcement came in an upbeat trading statement in which Stagecoach said earnings for the year to April 30 will exceed market expectations, following the successful restruct-uring of its overseas businesses.
The slimmed-down firm, whose disposals in North America and Hong Kong have helped it cut debt, said the return of capital will not affect dividends per share or the group's progressive dividend policy. It added that the proposed capital return would not hamper it operationally and that the board hopes to maintain its investment grade credit rating.
Stagecoach attributed the improved outlook to a strong profit contribution from the UK rail division, a lower-than-expected tax charge, and a share of the profits in the second half of the year from its 49% joint venture with the Virgin Rail Group.
The company's shares surged on the news, closing 6.5p higher at 87.5p.
Stagecoach said it expects to report an exceptional tax credit of 40m following talks with the authorities over previous years' returns and provisions.
At South West Trains, a combination of passenger revenue growth of 5% and cost controls will see operating profits from Rail end "comfortably ahead" of last year's 38.2m.
Consolidated net debt, now less than 100m, will also undershoot market forecasts, the company said. Stagecoach has banked a further 12m from the sale of its residual 6% holding in Hong Kong toll road operator Road King Infra-structure. Stagecoach netted 52m from the disposal of 25% of Road King in January.
Stagecoach said the decision to return 250m to shareholders was consistent with its strategy of focusing on organic growth in its UK, North American and New Zealand bus and rail operations.
Further details of the proposed return of capital will be provided with the annual results on June 23. The distribution is likely to be on a "structured pro rata basis" to all shareholders, the company said.
PAUL ROGERSON April 20 2004 

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