Stagecoach cash return just the ticket for Souter and sister

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The Independent Online

Brian Souter and his sister, the two founders of the bus and rail group Stagecoach, are to net more than £60m from a return of cash to shareholders unveiled yesterday.

Brian Souter and his sister, the two founders of the bus and rail group Stagecoach, are to net more than £60m from a return of cash to shareholders unveiled yesterday.

Mr Souter, who still owns a 13.5 per cent stake in the business, will receive £33m, while his sister Ann Gloag, who owns 11.1 per cent of Stagecoach, will get slightly less than £28m.

The £250m return of capital is being conducted by means of an issue of redeemable B shares each worth 18p, rather than the more conventional share buy-back or special dividend. Mr Souter, Stagecoach's chief executive, said the mechanism it had chosen was fairer to small shareholders who generally miss out on share buy-backs and have to pay income tax on special dividends. The distribution announced yesterday amounts to a return of capital, so many of its 60,000 small shareholders will be able to escape tax by using their £8,200 capital gains tax allowance.

The issue of B shares is being accompanied by a share consolidation. A small investor with 1,000 ordinary shares will receive 1,000 B shares and 791 ordinary shares, which can be redeemed immediately on 22 September or retained and cashed in over a longer period.

Details of the cash payback to shareholders came as Stagecoach bounced back into the black last year with a pre-tax profit of £123m compared with a £466m loss in 2002-03 when the group's figures were marred by heavy write-offs.

Mr Souter also painted an upbeat picture of future prospects, saying Stagecoach's rail business, South West Trains, had returned to "high volume growth" for the first time since the Hatfield disaster while profit margins and turnover in its bus division were growing simultaneously for the first time.

The group is about to enter discussions with the Strategic Rail Authority for a five-year extension to the SWT franchise, which runs for another three years. Mr Souter, who came out of semi-retirement two years ago to lead the company, said he expected to remain chief executive for at least the next two years.

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