Stobart Group Limited Pre-Close Trading Statement (6601S)
March 13 2019 - 2:00AM
UK Regulatory
TIDMSTOB
RNS Number : 6601S
Stobart Group Limited
13 March 2019
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
13 March 2019
STOBART GROUP LIMITED
("Stobart Group" or the "Company")
Pre-Close Trading Statement and Update on Capital Review
Stobart Group, the Aviation, Energy and Civil Engineering group,
issues the following pre-close trading statement and capital review
update prior to the announcement of the full year results for the
12 months to 28 February 2019, which will be published on 15 May
2019.
The Company continues to make strong commercial progress in its
core Aviation and Energy operating divisions and is trading in line
with management expectations.
Aviation
London Southend Airport saw a 33% increase in passenger numbers
to 1.5m in FY 2019 (FY18 1.12m). Preparations are well underway to
welcome Ryanair, who will base three aircraft at the airport from
April 2019. London Southend Airport was also pleased to announce
recently that Loganair will be launching flights to Glasgow and
Aberdeen from May 2019, and to Carlisle Lake District Airport in
July, supporting further passenger growth.
On 22 February, Stobart Group confirmed it had disposed of its
regional airline and aircraft leasing businesses in return for
becoming a 30% shareholder, alongside Virgin Atlantic and Cyrus
Capital, in a newly created private vehicle, Connect Airways.
Stobart Group recognised a profit on disposal, on an accounting
basis. The disposed businesses will be treated as discontinued
operations in the FY 2019 results, with the FY2018 results
restated. Stobart Group expects to include 30% of any profit after
tax of Connect Airways in its Group results going forward.
Energy
All but three of the power plants in the UK and Ireland that
Stobart Energy supply to have completed the commissioning phase and
are now in full contractual operations, meaning the owners of those
are confident that the plants are at a level where it can perform
consistently. This improvement has helped Stobart Energy to deliver
1.3 million tonnes of renewable fuel, representing an increase of
over 45% on the previous year. This improvement was achieved
despite continued challenges with underperforming Power Plants
during their commissioning period. As a result of these challenges,
Stobart Energy will continue to carry non-underlying pre-contract
costs until the plants all reach the end of their commissioning
periods. Therefore, Stobart Energy is seeking to negotiate
compensation packages with the various plant owners.
Rail & Civils
The Company reported at the time of its interim results that it
had seen a material reduction in profitability against management's
expectations. This reduction followed a review of ongoing contracts
that were substantially completed in prior periods, resulting in a
downgrade in the recorded performance of those contracts.
Following the conclusion of the review, Stobart Rail &
Civils strengthened the management team and has put in place a more
disciplined approach to contract quality, focusing on securing
contracts with external tier-one customers. This process is
generating improved results in terms of new business. This year the
team has worked on the Newton Heath Maintenance Building Project
for Northern Rail and recently signed a significant new contract
with Nexus; the Tyne and Wear Passenger Transport Executive.
Capital Review and Dividend
At the time of the publication of Stobart Group's interim
results to 31 August 2018 on 24 October 2018, the Company announced
its intention to undertake a capital review. Further details of the
review were announced on 3 December 2018.
Stobart Group continues to review its capital requirements. The
objective is to ensure that the Company can accelerate and deliver
its ambitious plans to fund future growth and shareholder returns
from operating cashflow on a sustainable basis.
The majority of the Group's planned investment will be deployed
at London Southend Airport to put in place the infrastructure
required to serve up to 10 million passengers per year. The Company
continues to evaluate both the quantum of the investment required
and the opportunities to fund growth through the disposal of
non-core assets. To that end, Stobart Group has recently increased
its available cash resources to support its growth plans through
asset sales and the placement of shares on 11 January 2019 with
Cyrus Capital, generating GBP24.7m, following the announcement of
the recommended cash offer for Flybe PLC.
In light of the current assessment of our investment
requirements and cash flow the Board believes it would be more
appropriate to move to a twice-yearly dividend made in equal
payments of 3p per share. The first payment of 3p per share is
expected to be paid in July 2019.
The person responsible for arranging the release of this
announcement on behalf of Stobart Group is Louise Brace, Company
Secretary.
Enquiries:
Stobart Group Limited C/o Newgate Communications
Charlie Geller, Head of Group Communications
Newgate Communications +44 203 757 6880
Robin Tozer stobart@newgatecomms.com
Ian Silvera
Fiona Norman
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END
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