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Stobart Group LTD

Stobart Group Limited A transformational year

Stobart Group Limited (LON:STOB), the aviation, energy and civil engineering group, today announced its full year results for the 12 months to 28 February 2019. The Group is delivering underlying EBITDA results in line with management expectations and continues to make strong commercial progress.

Warwick Brady, Chief Executive Officer, Stobart Group, said:

“This has been a transformational year for Stobart Group. We have significantly strengthened the Board and management team and taken the opportunity to deal with legacy issues while putting in place appropriate operational rigour within the business. As a result of the disposals and impairments in the year, the Group has de-risked its balance sheet.

“Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors. These are high growth assets with strong market positions that are now well positioned to become increasingly cash generative.

“We will invest in accelerating the growth of our aviation and energy businesses through existing cash resources and further non-core asset sales. By doing this, we can deliver sustainable operating cash flows and significant long-term value for shareholders.”

   28 February 2019 Adjusted28 February 2018% changeRestatedStatutory28 February 2018
Aviation    
Passenger numbers1.5m1.1m+33%1.1m
Aviation revenue£39.4m£25.8m+53%£25.8m
Underlying Aviation EBITDA2£4.9m£1.7m1+177%£5.8m
     
Energy    
Tonnes supplied1.3m0.9m+51%0.9m
Energy revenue£65.1m£54.7m+19%£54.7m
Underlying Energy EBITDA2£19.2m£12.1m+60%£12.1m
     
Underlying EBITDA2 from two main operating divisions£24.1m£13.8m1+75%£17.9m
Group    
Revenue£146.9m£105.4m+39%£105.4m
Underlying EBITDA2£10.8m£14.2m3-24%£138.1m
(Loss)/profit for period after taxation from continuing operations(£42.6m)(£14.3m)3-199%£109.6m
(Loss)/profit for period(£58.2m)(£23.9m)3-144%£100.0m

1 Excluding profit on disposal of hotel of £4.1m to allow for underlying trading comparison

Underlying EBITDA represents (loss)/profit before tax and before swaps, interest, depreciation and non-underlying items

Excluding profit on sale of Eddie Stobart Logistics plc shares of £123.9m

The Statutory 2018 results have been restated where required due to IFRS 5 Discontinued Operations.

The adjusted 2018 column has been presented to better allow the reader to compare our year on year continuing performance by making adjustments to the restated 2018 statutory results for certain items described in the above footnotes.

Financial performance: Strong core growth and legacy issues dealt with

· Group revenue from continuing operations increased by 39% to £146.9m and adjusted underlying EBITDA from our two main operating divisions, Aviation and Energy, was up 75% to £24.1m.

· The Rail & Civils division reported an underlying EBITDA loss of £4.8m, having reassessed the forecast outturn of all contracts, including those committed to in prior periods. This EBITDA loss was improved by £3.9m as a result of an IFRS 15 transition adjustment.

· There are a number of items that contributed to the Group loss of £58.2m.

o This included £10.2m of costs in Aviation (related to airline marketing) and Energy (associated with maintaining the supply chain during third-party plant commission delays), and £5.2m of legal costs mainly associated to the shareholder dispute.

o Non-cash items included £16.3m of depreciation from continuing operations, impairment charges of £7.8m related to infrastructure assets and £3.2m of loan note impairment charges.

o In addition, the Group made an overall loss from discontinued operations of £15.5m, including the profit on disposal of Everdeal (Stobart Air) of £25.9m, which was then reduced by the impact of the UKFFO losses of £31.7m. Operating profits in Stobart Air and Propius totalling £2.6m were then reduced by an onerous lease provision of £12.3m associated with Propius.

· £38.4m (2018: £27.3m) was realised from the sale of non-operating assets. Following this, the Group has £82.6m (2018: £127.2m) of non-operating infrastructure assets and £44.9m (2018: £63.7m) of Eddie Stobart Logistics plc shares held on the balance sheet at the year end.

· £52.5m was returned to shareholders through dividends. This was largely paid from non-core asset sales of £38.4m and debt facilities, leading to an increase in net debt to £83.1m. Subsequent to this, as previously announced, the dividend has been appropriately rebased.

Strategic highlights: A clear investment plan

· Stobart Group was part of the consortium that successfully bid for Flybe, simultaneously selling Stobart Air and entered into an agreement to sell our aircraft leasing business, Propius. Following this transaction, Stobart Group has a 30% investment in Connect Airways, which will identify cost synergies between Stobart Air and Flybe, reset the cost base and develop a London connectivity strategy that will involve London Southend Airport.

· Post year end, the Group monetised its holding in Eddie Stobart Logistics plc through the issuance of a five-year exchangeable bond secured over its shares raising £53.1m, pre fees, and in excess of £50m of cash.

· Stobart Group now has a clear plan to invest in accelerating the growth of its core operation divisions, and the cash resources with which to fund that investment this year.

Operating highlights: Focused on two excellent growth businesses

· Stobart Aviation is now focused entirely on airports and aviation services. Its principal asset, London Southend Airport, saw a 33% increase in passenger numbers. easyJet flew circa 1m passengers at London Southend Airport in 2018. Ryanair flights commenced in April, and Loganair flights in May 2019.

· 97% of the renewable energy plants that Stobart Energy supplies to have now started commissioning and 90% have reached commercial operations. Stobart Energy reached a year end run rate of 1.7m tonnes per annum as a result of more consistent plant performance. The Mersey Bioenergy and Margam plants are expected to reach commercial operations in the near term. Port Clarence is yet to start commissioning.

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