TIDMESKN
RNS Number : 8738R
Esken Limited
11 March 2021
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of domestic law by virtue of the European Union
(Withdrawal) Act 2018.
11 March 2021
Esken Limited
("Esken" or "the Group")
Trading update
Esken, t he aviation and energy infrastructure group, issues the
following update on trading for the year to 28 February 2021.
Summary
-- Strict financial discipline has resulted in GBP77.4m of cash
and undrawn bank facilities available as at 28 February.
-- London Southend Airport benefited from continued activity
through its global logistics operation.
-- Gate fees at Stobart Energy have continued to improve toward pre-COVID-19 levels.
-- Esken is progressing a range of options regarding Stobart Air
& Propius and expects to bring the matter to conclusion in the
near term.
David Shearer, Executive Chairman said, "We have continued to
deliver against the strategy we set out at the time of our capital
raise in June 2020 despite the business interruption caused by
COVID-19 extending far beyond all reasonable expectations at that
time."
"Esken is becoming a more focused business. We divested the Rail
& Civils division and remain committed to exiting Stobart Air
and Propius. As a Board, we are undertaking a review of our
strategic options in light of the impact of the pandemic. We are
doing this to ensure that we protect the capability of our core
operations and focus on delivering value for shareholders."
"We continue to maintain strict financial discipline. This has
allowed us to minimise cash burn and protect our liquidity
position. Stobart Energy is delivering important cash generation at
a time of challenge within our aviation businesses. This
discipline, coupled with the depth of operational talent within our
businesses, will allow us to protect the value of our core assets
and navigate the recovery as vaccine programmes are rolled out
across Europe and activity levels recover."
Balance sheet and liquidity
Esken's strict financial discipline has resulted in the Group
having GBP77.4m of cash and undrawn bank facilities available at 28
February 2021. The cash burn for the Group excluding Stobart Air
and Propius was GBP9.4m for the six months to 28 February 2021.
Esken remains committed to exiting Stobart Air and Propius in the
near term.
The COVID-19 pandemic has created unprecedented challenges for
Esken and the aviation sector as a whole. Overall cash flows are
currently trading ahead of the budget set out of for a reasonable
worst case scenario at the time of the capital raise in June 2020.
That scenario envisaged lockdown restrictions extending no later
than March 2021 and a slow recovery in the aviation sector through
to June 2021. It is now clear that lockdown restrictions will last
longer and the recovery will be slower than was predicted in June
2020.
Trading
London Southend Airport
London Southend Airport has a strong and differentiated
commercial passenger proposition and allows airlines to generate
similar yields to other London airports but at a lower cost per
passenger. This low cost proposition will appeal to cost conscious
airlines as the aviation sector recovers from the pandemic.
Lockdown restrictions curtailed much of the commercial passenger
operations at London Southend Airport during the year as evolving
quarantine arrangements and late changes to travel corridors eroded
passenger confidence when restrictions were lifted. As a result,
147k passengers flew through London Southend Airport compared to
2.1m in the prior year. Of those 147k passengers, 68k flew in March
2020 before the travel restrictions really took hold. Though some
flying is expected to resume in May 2021 we do not envisage this to
restart in earnest before June 2021.
In response to this trading environment, management took a range
of decisive actions to greatly reduce cash burn, including
extensive use of the Government's furlough scheme. London Southend
Airport benefitted from continued operations and income from its
global logistics operation throughout the year. However, movements
reduced during January and February 2021 due to Brexit uncertainty
and seasonal variances. The logistics operation is confirmed to
return to previous full operational levels by the end of March
2021.
Stobart Aviation Services
Stobart Aviation Services provides check in and baggage handling
services to airlines at airports across the UK. Activity has been
impacted by the restrictions to flying during the year. It closed
its operations in Edinburgh and Glasgow Airports which helped to
manage costs and allow it to focus on operations at London Southend
Airport, London Stansted Airport and Manchester Airport. Stobart
Aviation Services is developing a strong reputation within global
logistics and cargo operations and is exploring further growth
opportunities in that sphere.
Stobart Energy
Stobart Energy is the UK's number one supplier of waste wood
fuel with long-term, high-margin contracts and was cash generative
in the year. It has high entry barriers, and its supply contracts
are underpinned by long-term UK Government subsidies (ROCs)
received by its customers.
Lockdown restrictions that took place through November and from
late December onward have not inhibited the construction industry
in the same way that the March 2020 lockdown did. As a result, the
availability of waste wood has been uninterrupted since the end of
that first lockdown. This has meant that Stobart Energy has
continued to meet the supply needs of its biomass plant partners
and fulfil its contractual obligations.
As previously announced, the demands on waste wood supply have
remained particularly high as a range of end users re-stock. This
initially resulted in lower gate fees (the fee that the business
charges to its suppliers for taking their waste wood) for Stobart
Energy. However, these have since been continually improving toward
pre-COVID-19 levels.
Stobart Air and Propius
Esken remains in advanced discussions regarding its exit from
Stobart Air and Propius. These discussions have been impacted by
the fact that the restrictions on commercial passenger flying have
extended beyond the original reasonable worst case scenario and the
outlook for aviation has continued to decline.
This has not provided a favourable backdrop for an exit from an
airline and aircraft leasing business. Despite this, Esken has a
number of options and is engaged actively in achieving the best
outcome. Esken remains confident of bringing this matter to a
conclusion in the near term.
Guidance
Further to our previous announcements, the COVID-19 situation is
likely to remain uncertain for some time and all guidance
consequently remains suspended.
Enquiries:
Esken Limited
Charlie Geller, Communications Director
C/O Tulchan Communications
Tulchan Communications 020 7353 4200
Olivia Peters/David Allchurch esken@tulchangroup.com
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