(Alliance News) - Stobart Group Ltd on Thursday posted a sharply widened loss for financial 2020 and said that it will raise over GBP120 million to stabilise its financial position while maintaining operational capability amid the disruption caused by the Covid-19 pandemic.
The owner of London Southend Airport also said that it will pursue a new business strategy recognising the changes in the economic and social environment due to the virus outbreak.
As part of its strategy, the company plans to focus on its Aviation unit, which includes the London Southend Airport, and realise value for its Energy business as it starts to benefit from resumption of activity in the construction sector.
Furthermore, Stobart plans to withdraw from its Rails & Civils business during the course of the year ending February 28, 2021. Also, all other non-core businesses or assets will be realised for value over the next three years, the company said.
Chief Executive Warwick Brady said: "We are today announcing a clear plan to stabilise the business and provide a secure platform to move forward. We have a cost-efficient proposition for airlines and will further develop our passenger-focused airport experience that seeks to maintain passenger flow and provide enhanced customer confidence. Therefore, we will focus our investment and our business in this asset by seeking to dispose of our non-core businesses and, in due course, monetise Stobart Energy.
"The launch of the capital raise that we have announced today will provide the Group with the financial resilience necessary in the current environment and ultimately to position the business for success in the post Covid environment".
Stobart plans to raise between GBP80 million and GBP100 million by way of a firm placing and placing and open offer of new shares at a price between 35 pence and 40 pence per share.
Shares in Stobart closed at 69.20 pence each in London on Thursday, up 4.5%.
It also has entered into an amended facility agreement comprising the original GBP80.0 million revolving credit facility and a new GBP40.0 million revolving credit facility.
The Carlisle-based company intends to use the net proceeds from the equity issue for general corporate purposes, including repayment of certain amounts drawn under the revolving credit facility, support the Aviation and Energy business.
Funds will also be used for selective investments including airport infrastructure for post Covid-19 world.
For the year ended February 29, Stobart posted a pretax loss of GBP158.0 million, compared with a pretax loss of GBP42.1 million loss in the year ago period.
Revenue increased 16% to GBP170.2 million from GBP146.9 million. Core Aviation unit saw a 44% jump in revenue to GBP56.8 million, while Energy unit recorded a 17% rise to GBP65.1 million.
The widened annual loss was mainly due to a sharp jump in exceptional charges, including impairments, which totalled GBP138.6 million versus GBP28.9 million.
Impairments rocketed to GBP101.9 million from GBP7.8 million.
Stobart said: "Impairments includes the write down of the Connect Airways loans that are deemed to have nil value following Flybe and Connect Airways entering administration post year end. Infrastructure assets have been written down by GBP26.6m, including CLDA and Widnes development land.
"Post year end, the group disposed of the Stobart and Eddie Stobart brands, driving a GBP19.9 million impairment to align the year end value with the contractual consideration. The group's investment in AirPortr has been impaired by GBP1.8 million to value the investment at GBP1 per share. The write off of goodwill and other intangible assets attributable to Rail & Civils totalled GBP8.5 million".
Underlying earnings before interest, tax, depreciation and amortisation, jumped 48% year-on-year to GBP16.0 million.
Cash at end of financial 2020 amounted to GBP9.8 million, down from GBP14.4 million a year ago.
By Tapan Panchal; tapanpanchal@alliancenews.com
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