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Founder retires

Souter steps down as chairman of Stagecoach

Sir Brian contributor

Sir Brian Souter: time to go

Stagecoach founder and chairman Sir Brian Souter is retiring from the Perth-based transport group and will be replaced by non-executive director Ray O’Toole.

Sir Brian, who has a net worth of £875 million, said he wanted to focus on other interests, including his family but will remain on the board of Stagecoach as a non-executive director.

His sister Dame Ann Gloag, with whom he set up the business in 1980, will retire from the board along with fellow non-executive director Ewan Brown on 31 December.

Deputy chairman and senior independent director, Will Whitehorn, will support the handover of the chairmanship. As previously announced, Mr Whitehorn will step down from the board on 30 June 2020 when the role of deputy chairman will be discontinued.

Gregor Alexander, non-executive director, will succeed Mr Whitehorn as the senior independent director.

Sir Brian has been active outside business and in October made what said to be the biggest charitable donation from a Scot since Andrew Carnegie gave away his fortune. His donation of £109m to the Souter Charitable Trust came on top of £98m he had already gifted to the Souter Charitable Trust which has supported 13,000 worthwhile causes over 13 years.

He said: “At the age of 65, the time is right for me to step down as Stagecoach chairman to spend time on my other interests and with my family, including my three young grandchildren.

“My family and I continue to have a significant shareholding in Stagecoach and I have every confidence in the management team, our strategy and the positive prospects of the business. I look forward to continuing to represent the interests of stakeholders as a Non-Executive Director on the Board.”

Following these changes, the board will consist of seven directors and has acknowledged that following the planned changes, only one of its directors will be female and this will be addressed.

In a statement the company said: “Over many years, the board and our company more widely has benefitted from highly skilled and experienced female directors and executives. Consistent with our previously set long-term aspiration for female representation on the board of at least 25%, we will look to address this area as part of board succession planning.”

Ray O’Toole said: “The contributions of Sir Brian Souter and Dame Ann Gloag both to the public transport industry and to Stagecoach as co-founders, senior executives and directors cannot be overstated.

“The insight and wisdom of Sir Ewan Brown over his many years as a director of the Company have also been key in its success. On behalf of the company, I extend my sincere thanks to all three of them and I look forward to continuing to work with Sir Brian and having access to his insight on the board.

“I am delighted to have the privilege of succeeding Sir Brian as chairman of Stagecoach, a company which continues to innovate and lead the sector, and deliver consistently for its customers. Most of my career has been in public transport and I am confident about the prospects for sustainable mass transit and for Stagecoach.”

The board changes came alongside half-year figures showing revenue from continuing operations was £800.2m (H1 2019 restated: £1,009.9m), reflecting the end of the Virgin Trains East Coast franchise in June 2018 and the end of the East Midlands Trains franchise in August 2019. 

Adjusted total operating profit from continuing operations was £79.6m (H1 2019 restated: £87.5m).  The change in operating profit reflects lower UK Bus profit because of various factors including 2018’s exceptionally good summer weather contrasting with this summer’s poorer weather and the non-recurrence of prior year revenue from operating bus services related to rail re-signalling work in the Derby area. 

Unadjusted operating profit from continuing operations was £77.0m (H1 2019 restated: £63.3m), with the increase principally due to the non-recurrence of prior year expenses for the equalisation of guaranteed minimum pension benefits.  The interim dividend is maintained at 3.8p per share

Martin Griffiths, chief executive, said: “Our updated strategy is based on three key objectives: maximise our core business potential, manage change through our people and technology, and grow by diversifying. 

“We have designed the strategy to deliver a sustainable business, diversify our exposure to risk and create value for all of our investors, customers, employees, communities and the environment.  Our strategy will continue to be underpinned by a clear focus on safety and customer service.

“Investment is underway to up-skill our teams, improve our back-office systems and make our business more agile. We are also at the forefront of industry-leading innovation in greener vehicles, autonomous technology, contactless travel, and app-based ticketing and information.

“We welcome recent Government pro-bus policy and funding commitments. Combined with our own initiatives and our support for the wider UK bus industry strategy, we are well placed to benefit from the global drive for better mobility, cleaner air and action to protect the future of our planet.

“Our expectation of full-year adjusted earnings per share remains unchanged.

Market reaction

John Moore, senior investment manager at Brewin Dolphin, said: “A significant period of transition continues at Stagecoach with Sir Brian Souter’s decision to step down as chairman and the departure of Dame Ann Gloag, among a series of board changes.

“They have made invaluable contributions not only to Stagecoach as an individual company, but Scotland’s entrepreneurial and business community. Aside from the personnel changes, Stagecoach is in the process of re-balancing its business by focussing on core areas.

“While this has hit revenues and transformation programmes are almost invariably complex, the moves seem to be a step in the right direction given the wider transport environment. In summary, this is another resilient set of results from Stagecoach as it aims to re-group and build new foundations for future growth.”

Ed Monk associate director from Fidelity Personal Investing’s share dealing service said: “As the largest regional provider of buses, Stagecoach has found itself thrust onto the front line in the election thanks to Labour manifesto plans to help councils to take control of local bus services.

“Yet even in the event of a Boris Johnson majority Stagecoach could face difficult changes due to pressure to move regional buses to a more London-style franchise network, where local authorities have more control over routes and tendering.

“Stagecoach is already limbering up for a fight with the Government in court over the decision to bar it from bids on train lines, which was followed by its exit from the East Midlands line. Stagecoach shares have taken a setback this year as it refocuses its business away from trains.

“Financially, Stagecoach has been squeezed with interim results today showing lower revenue and adjusted profits compared to the first half. The numbers this year have suffered thanks to worse weather when compared to 2018.”

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