Bus and rail group Stagecoach today announced plans to return £250 million to shareholders as it posted a 6.2% rise in annual profits.

Stagecoach said falling debts and disposal of much of its North American coach business would allow the return of capital, equivalent to 18p a share.

It said the move would create a more efficient capital structure whilst giving it enough financial flexibility to take advantage of future investment opportunities.

The Perth-based group reported pre-tax profits before goodwill and exceptionals of £120 million, up from £113 million previously.

It said it had had a strong year of growth, with turnover up in its UK bus and rail businesses and signs of recovery in its slimmed-down Coach USA division.

In UK rail, which includes South West Trains and a 49% share in Virgin Rail, operating profits before one-off items and goodwill were up 15.4% as performance improved significantly.

Chief executive Brian Souter said the group had made a promising start to the current financial year, with trading in line with expectations.

"Our shareholders can share our confidence in the future prospects of our business," Mr Souter said.

Wednesday June 23, 2004