MERSEYSIDE'S second-biggest bus operator, Stagecoach, said yesterday it was returning around £700m to its shareholders. The company, which also owns a 49% stake in Virgin Trains, had already said in December that it would return at least £400m after reporting it had paid off all of its debt. But this figure has now grown to £700m - worth about 63p per share - after better fuel costs and improved prospects in its UK bus division and Virgin Rail joint venture. Stagecoach said current trading was at the upper end of its own expectations, as were the prospects for its financial year to April, 2008. Stagecoach shares, which have outperformed the leisure and travel sector by 11% over the last year, rose 2.2% to 164.25p following the news yesterday, valuing the group at around £1.8bn. The group, which took over Liverpool-based Glenvale Transport in 2005, allowing it to enter the Merseyside market, said both its UK and North American bus operations had been boosted by strong revenue growth and falling fuel prices. In a trading statement, it said: "We have seen excellent revenue growth in the UK bus division where the trends seen in the first half of the year have continued. This includes one-off growth from the new concessionary fare schemes introduced in Scotland and England from April, 2006. "The continued revenue growth, integration of acquired businesses, reduced fuel prices and returns on additional pension contributions should result in further strong progress by UK Bus for the year ending April 30, 2008." On its Virgin Trains joint venture, it added: "Virgin Rail Group continues to experience good financial results. "The re-negotiated West Coast rail franchise is benefiting from strong revenue growth and increasing market share at the expense of the domestic airline market in particular, which has resulted in an improved outlook." The company said the payout to shareholders represented surplus capital from the group and came in addition to future investment in the business. It added that it currently had some of the lowest bus fares on the market, while rail fares were largely regulated by the Government and not by the company. | 
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