30 Jul 2020 07:00
30 July 2020
STOBART GROUP LIMITED
('Stobart Group' or 'the Company')
AGM Statement
Stobart Group, the aviation and energy infrastructure group, holds its Annual General Meeting today at 11.00am at the Company's London office: 15 Stratford Place, London W1C 1BE. As a result of social distancing requirements, shareholders will not be able to attend in person but can attend electronically, details for which are set out in the Notice of AGM documents.
At the meeting, David Shearer, Chairman, will make the following statement:
"The global COVID-19 pandemic has had an unprecedented impact on economies and businesses as a whole, and the aviation sector in particular. In spite of the challenges which we have faced Stobart Group has made good progress in the execution of the strategy which was set out in the prospectus on 5th June.
As we focus on our two core sectors of Aviation, being Airports and Aviation Services, and the Biomass Energy business, we have committed to exit all non-core assets for value over the next three years.
As a first step in this process, we have already completed a transaction to dispose of our loss-making Rail and Civils business, removing the ongoing risk to shareholders while at the same time securing a future for 188 employees.
Stobart Group is trading in line with management expectations. In our core divisions, London Southend Airport has reopened to passenger flying and Stobart Energy has benefited from a restart in construction work across the country leading to increased availability of waste wood. Because of this, Stobart Energy is now able to achieve required volumes of biomass fuel to its plant partners. Having carefully stress tested the Group's liquidity position under a variety of operating scenarios at the time of our successful capital raise in June, the Board remains confident in the Group's balance sheet, liquidity position and outlook.
London Southend Airport
London Southend Airport is a key strategic asset for the Group and there is the opportunity to create further shareholder value in the medium term due to three key factors: our ability to establish an enhanced passenger experience for post-COVID-19 travel; the ability to offer a cost efficient London base of operation to all airlines; and the airport's location serving London, which pre-COVID-19, was the largest travel market in the world.
We have taken steps to enhance the passenger experience by putting in place best-in-class cleaning measures and by utilising existing space and new technology. London Southend Airport has now installed and is operating next generation security scanning equipment that is part of our contact free plan for the airport. We will continue to invest in line with the anticipated increase in the passenger volumes.
Ryanair recommenced operations on 1 July and is now flying to nine destinations, increasing to 14 in August, including routes to new destinations such as Bucharest and Marseille. Wizz Air started flying on 6 July and easyJet restarted its schedule with flights to 4 destinations on 20 July. The airport is currently servicing 35 flights per week, achieving good load factors.
easyJet has stated its intention to enter a consultation process regarding a proposed plan to close three bases, including two London airports; Southend and Stansted. We believe easyJet operated a number of attractive, well-established routes from London Southend and remain in dialogue with them. Whilst we await the conclusion of their consultation period, we have also commenced discussions with other airlines regarding their interest in some of these routes.
Stobart Energy
At Stobart Energy we appointed a new management team at the start of FY21 and over the past few months they have been undertaking a full review of the operations to identify potential improvements in the business model.
We are also taking steps to rebuild waste wood stock ahead of the anticipated winter demand. This business remains profitable, cash generative, with high barriers to entry and long-term contracts. Our objective remains to monetise this business over the next 18 to 24 months.
Stobart Air
The airline is operating limited flights from Dublin to Kerry, and Donegal under Public Service arrangement, as well as Edinburgh and Glasgow. Wider UK services remain suspended until 20 August pending the Irish Government's decision on the 14-day quarantine exemption.
In order to optimise the existing fleet and to minimise financial exposure to the Stobart Group, Stobart Air has opened a new base at Belfast City Airport and has put on sale routes to Edinburgh, Glasgow, Manchester, Birmingham, East Midlands and Leeds Bradford under its Aer Lingus franchise agreement. Despite this positive progress, the operating environment remains challenging and costs are being closely monitored with steps being taken to conserve cash. Stobart Group's overriding objective is to mitigate its financial exposure and we have commenced early discussions with potential partners around the long-term future of this business.
Stobart Group
I was pleased to welcome Clive Condie to the Board as Non-Executive Director on 1 July 2020. His aviation experience gained over more than 35 years working for the likes of British Airways, Manchester Airport and Luton Airport further strengthens the depth of expertise on the Group Board.
Stobart Group continues to maintain tight cost controls. The Board and senior leadership team have taken extended pay reductions until October, a recruitment freeze remains in place and all discretionary spend continues to be deferred. Staff are increasingly returning to work in locations where sufficient operational recovery makes it viable.
Overall, despite the impacts of the COVID-19 pandemic, the Group continues to own a valuable London airport with significant medium-term growth opportunities and a strong cash generative Energy business. It has available liquidity to maintain and develop these assets following its successful capital raise and is focused on building value for shareholders as we move into a post COVID world.
Enquiries:
Stobart Group Limited C/o Newgate Communications
Charlie Geller, Group Communications Director
Newgate Communications +44 203 757 3406
+44 203 757 6884
Giles Croot stobart@newgatecomms.com
Ian Silvera
Isabelle Smurfit