TIDMSTOB
RNS Number : 7929P
Stobart Group Limited
05 September 2017
5 September 2017
STOBART GROUP LIMITED
('Stobart Group' or 'the Group')
Pre-Close Trading Statement
Stobart Group, the infrastructure and support services group,
issues the following pre-close trading statement prior to the
announcement of the interim results for the six months to 31 August
2017, which is expected to be made on 19 October 2017. On that
basis, the close period is expected to begin on 19 September
2017.
Highlights of the first half performance
-- Aviation- good progress, with passenger numbers growing 22%
year on year through London Southend Airport.
-- Energy- delays in commissioning certain third party biomass
power stations has impacted short term volumes but EBITDA per tonne
is ahead of target.
-- Rail- on track to deliver EBITDA on rail and civil engineering projects.
-- Infrastructure/Investments - benefited from significant
uplift in value of around GBP120m and cash generation of around
GBP113m following the partial disposal of the investment in Eddie
Stobart Logistics, in which we retain a 12.5% stake.
-- Stobart Group has returned GBP26.4m to shareholders in dividends since 1 March 2017.
-- Quarterly dividend increased from 3p per share to 4.5p per share from July 2017.
Aviation
In the five months to 31 July 2017, passenger numbers at London
Southend Airport increased by 22% to 482,000. This increase
reflects the growing awareness of our airport's customer
proposition. London Southend Airport offers a convenient and
efficient experience at a time when demand for air travel in the
London area is increasing and the other airports are at capacity,
particularly at peak times. We are pleased to announce that London
Southend Airport was recently awarded the highest score (84%) of
any London airport for customer satisfaction by Which?, a position
it has held for the last five years.
We continue to have advanced talks with a view to introducing
additional airlines to operate from London Southend Airport. This
is taking longer than originally planned, with airlines' planning
schedules requiring a lead time of 6 to 18 months for investment in
new operations.
EBITDA per passenger from commercial airport activities is close
to the management's target with commercial enhancement activities
ongoing.
We continue to support new route development at London Southend
Airport, through our franchise with Flybe operated by our regional
airline. In May 2017, we started operations to 11 additional
European destinations.
The Group is confident about meeting the 2018 and 2022 calendar
year targets but with some risk in the near-term targets.
Energy
Stobart Group has successfully deployed its logistics experience
to put in place a renewable energy fuel supply chain to supply two
million tonnes of biomass to power stations across the UK. Six of
these are new power stations either in commissioning or due to be
commissioned soon. However, as widely reported, the new power
stations have experienced both delays in commissioning and volume
volatility during the commissioning process, outside of our
control. In the first six months, the variance in actual volume
compared to notified volumes from these new power stations was
around 190,000 tonnes with only around 40,000 tonnes supplied. In
the second half, according to latest notifications from new power
stations, we would expect to deliver around 330,000 tonnes under
these contracts.
Whilst some of these delays are longer than we could have
anticipated, the long-term total volume is not affected as our
contracted volume starts post commissioning at the start of
commercial operations. There are further non-underlying costs
relating to the challenges in the build-up to the official contract
start date of around GBP1.6m. We are looking to recover some of
this extra operational cost from the plants where it relates
directly to their delays.
Our actual EBITDA per tonne is ahead of our stated objectives
and our strategic targets remain unaltered.
Rail
The Rail division continues to develop its pipeline of work on
rail, internal and third party civil works, and using innovation in
the development of plant and machinery that will bring efficiencies
to the rail and civils sectors, and help enhance profitability.
Infrastructure/Investments
In the first half, both divisions are on track to deliver
planned EBITDA. This includes a significant uplift in value of
around GBP120m and cash generation of around GBP113m following the
partial disposal of the investment in Eddie Stobart Logistics, in
which we retain a 12.5% stake. We continue to look at opportunities
to realise value through asset management and disposals at the
right time.
Our regional airline and leasing business are ahead in the first
half but the airline is expected to incur costs in the second half
as it helps to build and market new winter routes flying out of
London Southend Airport. We are also reviewing alternative
structures for our airline and leasing business that can play an
important part in the consolidation of the regional airline
sector.
Stobart Capital
Stobart Capital is now established and is actively identifying
and progressing investment opportunities which it is developing
with the Stobart Group Board via its Value Creation Committee.
Outlook
We have set out our targets of 2.5m passengers at London
Southend Airport and 2m tonnes of biomass supply annually, by the
end of calendar year 2018. We believe that we can achieve these
targets but this is dependent upon the successful commissioning of
third party biomass power stations and the securing of another
major airline starting operations at the airport in 2018. The Board
is confident that short-terms delays will not affect the long-term
value creation potential of the business.
We have also established and communicated extended targets
through to 2022 of 5m passengers through London Southend Airport
and 3m tonnes of fuel supply and we are confident that we can
continue to deliver value to shareholders through this period and
beyond.
Dividend
We reported in the AGM statement in June an expectation to pay
an increased quarterly dividend of 4.5p per share, starting with
the payment made on 7 July 2017. The Board has subsequently
declared an interim quarterly dividend of 4.5p per share which will
be paid on 6 October 2017 to shareholders on the register as at 15
September 2017. Subject to Board approval, further quarterly
dividend payments of 4.5p per share will be made on 19 January 2018
and 13 April 2018. The Group has non-operating asset resources
available to support the dividend until 2022 and thereafter,
dividends are expected to be funded out of operating profits.
Chief Executive Warwick Brady commented:
"In my first two months as CEO of Stobart Group I have been out
meeting our people and key partners, and I continue to review each
of our divisions and our ability to meet our targets for calendar
year 2018. Whilst I remain committed to these targets there is some
short-term risk in Energy and Aviation.
In order to meet our aviation target we need to build a
portfolio of airlines that will capitalise on London's capacity
constraints as well as the large London catchment. This has taken
longer than we originally envisaged. However, I am convinced that
the overwhelming demand for additional airport capacity in London
means we will ultimately meet this objective.
Our efforts to meet our energy division targets have been
frustrated by delays experienced by our partners in commissioning
power stations. This has caused some volatility as the new plants
come on line, and this is impacting short-term performance.
I have also set further ambitious targets for 2022 and I am
confident that meeting these targets will deliver significant
dividend returns for shareholders over a number of years. We are
also working closely with Stobart Capital to enhance our strategic
development and identify new opportunities for increased
shareholder returns."
Enquiries:
Redleaf Communications +44 20 7382 4730
Charlie Geller Stobart@redleafpr.com
Sam Modlin
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTLLFLAASISIID
(END) Dow Jones Newswires
September 05, 2017 02:00 ET (06:00 GMT)
Esken (LSE:ESKN)
Historical Stock Chart
From Apr 2024 to May 2024
Esken (LSE:ESKN)
Historical Stock Chart
From May 2023 to May 2024