STOB.L Regulatory News (STOB)

16 May 2013

Stobart Group Limited

("Stobart" or "the Group")

Results for the year ended 28 February 2013

Stobart Group (Stobart), a leading provider of multi-modal Transport and Distribution, Estates, Air and Biomass services, and Infrastructure and Civil Engineering, today announces its results for the year ended 28 February 2013.

Group Overview

·; After a pivotal year, the Group is on track with its four year strategy (2011-15) to create shareholder value

·; Investment programme nearly complete

·; Group is moving into optimisation phase - focus is turning to selective realisations and cash generation

·; Objectives include improved communication with shareholders and other key stakeholders

Financial Highlights

·; Group revenue from continuing operations was £572.4m (2012: £491.7m)

·; Underlying operating profit* was £44.9m (2012: £40.1m)

·; Underlying profit before tax** was £32.5m (2012: £35.4m)

·; Final dividend of 4.0p (2012: 4.0p) per share payable on 5 July 2013, making a total for the year of 6.0p (2012: 6.0p)

·; Profit before tax and discontinued operations increased to £36.0m (2012: £29.2m)

·; Earnings per share from continuing operations of 9.0p (2012: 8.5p)

·; Loss on discontinued operation of £13.4m (2012: £0.3m)

·; Net cash generated from continuing operations £41.4m (2012: £59.0m)

·; Group property assets at £347.2m (2012: £327.0m)

·; Net Debt is £216.4m (2012: £166.0m)

Divisional underlying profit summary

* Underlying operating profit is a non GAAP measure shown on the Income Statement which includes one-off and non-cash items.

** Underlying profit before tax comprises the underlying operating profit of £44.9m (2012: £40.1m) less share based payments of £1.2m (2012: £0.4m) less finance costs of £12.0m (2012: £6.3m) plus finance income of £0.8m (2012: £2.0m).

Operational Highlights by Division

Transport and Distribution

·; Improved profits increased to £29.7m in tough market

·; Tesco work secured by 3 year contract from 1 March 2013 equivalent to over £500m of revenue over duration

·; Acquisition of Autologic Holdings in August 2012 for £12.4m and disposal of non-core Vehicle Services operation for £11.0m - enhances Pan-European offering and will create further synergy benefits during new financial year

·; Loss making Chilled Pallet Network closed, but other profitable Chilled operations retained

Estates

·; Good return on investment from Estates division of 26%

·; Successful integration of Moneypenny portfolio

Air

·; Airport passenger run rate currently over 800,000 per annum

·; Secured 4th Southend-based aircraft for 2013 with likely increase of around 250,000 passengers per year

·; Designated London's 6th airport by IATA

·; Investment in Airport near completion with final infrastructure spend during 2013 to accommodate around 5 million passengers

Biomass

·; New long-term Biomass supply contracts commenced with future revenue of over £140m

Infrastructure and Civil Engineering

·; Core profits of over £3m

·; Continued value-added services on internal projects

Chairman

·; As indicated on 2 April this year Avril Palmer-Baunack yesterday (15 May) resigned as Non-Executive Chairman. Paul Orchard-Lisle, a Non-Executive Director at Stobart Group since May 2011, has assumed the role on an interim basis while the search for a new Non-Executive Chairman is completed

Andrew Tinkler, Chief Executive Officer, said:

"Despite a turbulent year and a tough economic environment, our continuing operating businesses have produced a profit from continuing operations ten per cent up on last year and have again given us a good return on investment.

We are now at a pivotal point in our four year plan and with our investment programme nearly complete we are moving into our value optimisation phase. Through our property assets we will be looking to return cash into the business, while our Air and Biomass businesses are poised to deliver further value enhancement.

Our management team is now focused on realising value from the investments made over the last few years."

Enquiries:

Stobart Group +44 1925 605 400

Andrew Tinkler, Chief Executive Officer

Ben Whawell, Chief Financial Officer

Influence Associates +44 20 7287 9610

Stuart Dyble/James Andrew

Lansons Communications +44 7979 692287

Tony Langham +44 20 7294 3617

tonyl@lansons.com

Chairman's Statement

The Group's trading performance over the last year enables me to present a positive report. We remain focussed on delivering substantial shareholder value in accordance with the development plans agreed in 2011, and the ongoing proper governance of the business.

Trading Results

Group turnover rose from £491.7m to £572.4m and the underlying profit before tax was £32.5m compared with £35.4m in the previous year. Group profit before tax before discontinued operations for the year was £36.0m compared with £29.2m in the previous year. The discontinuation of the chilled transport network led to a loss after tax of £13.4m (2012: £0.3m) in the year. A more detailed analysis of the Group and Divisional trading results follows in the Chief Executive's Report and the Operational & Financial Review.

The Board

There have been a number of Board changes over the past year including Jesper Kjaedegaard stepping down at last year's AGM, William Stobart's reappointment to the Board in September 2012 and in January 2013, David Beever resigned from the Board to devote time to his other interests. Following the acquisition of the Autologic business in August 2012, Avril Palmer-Baunack was appointed an Executive Director and Deputy Chief Executive. On 21 January 2013 she was appointed Executive Chairman, replacing Rodney Baker-Bates. Mr Baker-Bates remains a Non-Executive Director of the Group. Ms Palmer-Baunack resigned as Executive Chairman on 2 April 2013 and left the Group on 15 May 2013. Alan Kelsey resigned as a Non-Executive Director on 23 April 2013. I was appointed Interim Non-Executive Chairman on 15 May 2013 following Ms Palmer-Baunack's departure from the Group on that date. In April, the Board initiated a search, supported by consultants, for a new Non-Executive Chairman. We have been pleased by the interest shown in the appointment and expect to make an announcement in the near future. We also anticipate the appointment of one or more new Non-Executive Directors to support in the next stage of our strategy.

The Board recognises fully that it has been tasked with delivering enhanced shareholder value in accordance with the strategy that we outlined at the time of the capital raising in May 2011. Our operating divisions are all performing well and are on track to deliver returns in line with the overall strategic plan. Our Board continuously reviews divisional performance alongside market conditions to make sure that we make the right strategic decisions for each of our businesses.

Dividend

An interim dividend of 2.0p was paid on 7 December 2012. The Board is proposing a final dividend of 4.0p per ordinary share, giving a total dividend for the year of 6.0p.

Outlook

The Group continues to respond robustly to the ongoing and challenging economic conditions. Whilst issues in the Chilled Transport network and the absence of disposals in Estates marginally held back the performance at the half year, at the end of the year Transport & Distribution and Biomass were ahead of last year. This was matched with the maturing of investments at London Southend Airport and the continued internal value delivered by our Infrastructure & Civil Engineering division.

Our underlying core Transport & Distribution business is strong and Biomass is growing year on year within a relatively new sector whose speed of growth has been arguably hindered by the slow pace of Government Renewable Obligation legislation. Stobart Air has made great headway in establishing its initial key user base, predominantly through our excellent partnership with easyJet. Our strong and diverse property portfolio already delivers an attractive income return. We will however take market led opportunities to realise its capital value.

With the investment phase of our four year strategy substantially complete our focus now moves to optimising performance and delivering maximum value for shareholders from the excellent base that we have built.

Paul Orchard-Lisle

Chief Executive's Report

We are at a pivotal moment in the delivery of our four year strategic plan that we set out in March 2011. With the investment phase now largely complete we are moving into the optimisation phase, realising the value in our divisions and delivering strong returns for our shareholders.

Our stated strategy of investment in businesses with high future growth potential followed by a two to three year period of value maximisation is on track. We understand fully that there are a number of ways that we can deliver return on our investment. Further, we know that a critical factor in maximising returns will be to get the timing of our actions right. Earlier this year, the Executive team, together with certain Board members, reviewed our strategy and confirmed that it is the right one for the Group. Matched with our commitment to sound governance, we will not be diverted from our long-term plan to maximise returns by short-term distractions. As we discussed last year, key in our ability to achieve this for shareholders will be our ability to continue to have the right people, in the right place with the right skills - and at the right time. We are making sure we have that team in place and we will continue to invest in our people through the year to keep them focussed and on track.

It has been a busy year. The discontinuance of the Chilled pallet consolidation business was complex in some ways for us, but overall our Transport & Distribution business has had a hugely positive year, further enhanced by the acquisition of Autologic in August.

This performance was matched with exciting and rewarding developments at London Southend Airport where we welcomed over 700,000 travellers through the airport during the period. This has been predominantly as a result of our burgeoning and highly successful partnership with easyJet. While costs have been slightly higher than expected as we took on more staff costs at start-up, we are very pleased with the development of the airport and our position in the London marketplace, with passengers recently voting us best performing airport for customer satisfaction.

As a result of our specialised offering of renewable fuel supply and transportation, our Biomass business is now in pole position to secure a significant proportion of this quickly developing market as the legislative approvals come through.

The Estates division has had an active year and has delivered strong results with the Moneypenny investment property portfolio now fully integrated into the Group and with a plan for each property. Going forward we will be looking to realise value in the most mature assets which will contribute both cash and reduce Group debt sooner than expected.

Overall the Group is well underway with the implementation of our four year plan. All the building blocks are in place and the investment phase is largely complete. We now move into the optimisation and delivery phase to unlock the inherent value in our business portfolio for the benefit of our shareholders.

Stobart Transport & Distribution

Transport & Distribution remains our largest operating division. Our ability to continue to develop and implement leading systems and processes has enabled us to remain competitive in a challenging environment and we continue to work to increase our already sector-leading fleet utilisation rates. We constantly strive to improve performance, increase our levels of customer service excellence and stay alert to opportunities to help our customers improve efficiency levels through implementing multimodal solutions.

In last year's Annual Report & Accounts we explained the benefits of our Time Based Planning system. As we use the system more we are better able to exploit its capabilities and thereby improve its effectiveness in our business and the efficiency of our operations.

Our ability to track each delivery and the elapsed time for each stage of that delivery enables us to monitor the factors driving our costs in detail, highlighting areas where we can, and do, improve efficiencies. We collaborate with our customers as partners in a business operation to improve performance and drive efficiencies for the benefit of both their business and ours.

It is through our deployment of powerful analytical tools across the business that we were able to spot firstly the opportunity to reorganise the Ambient transport network and, secondly, establish the need to restructure the Chilled business, which has led to the discontinuance of the Chilled pallet consolidation business.

A year ago, we outlined our plans to restructure the Chilled business that was originally acquired through the acquisition of Innovate in 2008 at low cost out of Administration. We envisaged the closure of two depots and a total restructuring charge in the 28 February 2013 Accounts of some £8.0m. As we began to implement the proposed restructuring following our detailed and ongoing analysis, it became apparent that this small load, multiple pick and drop business, which was principally undertaken for producers rather than retailers, was too unpredictable for a large scale operation.

We carefully considered whether there was a way in which we could re-engineer the business processes to reduce the imbalance in part-loaded running and the incidence of small drops. Unfortunately our analysis showed that we simply could not make this business profitable at the rates that our customers were prepared to pay. As a consequence, we decided to close the Chilled pallet consolidation business. The loss in the year including closure costs was £13.4m. This closure has not affected the chilled movements we undertake for our supermarket customers which continue to operate as part of the main Transport & Distribution business, or within the warehousing operation that we acquired from Innovate, which continues to perform well.

Stobart Rail Freight and Ports continue to operate well with steady growth in both areas. This is demonstrated by the increasing use of rail for our FMCG grocery traffic, creating both cost savings for customers whilst helping them to achieve carbon reduction targets. Our expertise in road-to-rail modal shift enables us to intelligently assist customers, providing innovative solutions for their logistical requirements. A typical example is the supply of stock to central London convenience stores through a rail facility at Euston Station.

In August 2012 we acquired Autologic Holdings plc for a cash consideration of £12.4m. Autologic operated two distinct businesses, Vehicle Distribution (transport) and Vehicle Services (workshops and storage) in the UK, Benelux and Czech Republic. In January 2013 we disposed of the non-core Vehicle Services business for £11.0m. However, we retain the freehold site at Portbury, which is used in this division, and currently lease it to the purchasers. The Vehicle Distribution business has been re-branded Stobart Automotive, forming a new business unit within our Transport & Distribution division. During the new financial year we expect to deliver savings and synergies from aligning this business unit with others in the division.

We plan to bring the Autologic transporter fleet up to the standards of the rest of our fleet. The reaction of customers to this acquisition has been extremely positive and we are now rolling-out the re-branding of the transporter fleet alongside the introduction of new systems and technologies.

As ever, the sustainability of any one of our transport or distribution operations is critical to both our customers and ourselves. To that end, we work tirelessly to reduce the environmental impact of our activities, not only by adopting the latest low emission trucks, but also by optimising their driven miles.

Stobart Estates

The Estates division has had a busy year and has delivered strong results against the backdrop of a very challenging property market. The Moneypenny investment property portfolio acquired in 2012 has now been fully integrated into the Group and a strategy is being implemented to maximise the exit value of each property. A number of asset management initiatives, including lease and rent review negotiations, have been undertaken in the year. These have been the key factors in the uplift in the value of the portfolio in the year of £5.2m.

The development of 37 Soho Square into high-end residential units is due for completion in June 2013. The first two sales at this property are contracted off-plan for a total of £5.7m which is extremely encouraging. Although the challenging market has meant that disposals have been slightly slower than anticipated, the division has nevertheless achieved three sales to date at a higher than expected profit. It is also worth noting that the division achieves a high income return, pending sales.

Key milestones have also been achieved elsewhere, including the completion of the Holiday Inn development at London Southend Airport and the gaining of planning consent for the redevelopment of Carlisle Airport and a biomass plant at Widnes.

With the management structure and strategy currently in place, the Board is confident that the Estates division will continue to deliver strong results in the medium term.

Infrastructure & Civil Engineering

The Infrastructure & Civil Engineering division has played a significant role in the development of London Southend Airport. It will continue to do so with the extension to the passenger terminal and other projects where we can use this division to drive value. This will also be the case with the development programme at Carlisle Airport which is expected to commence in 2013. Planning consent has been obtained for the biomass plant at Widnes and this too will be a project undertaken by the division. We are considering a number of different funding options for these developments.

External work, principally in the rail sector, continues and looking forward, a number of significant infrastructure projects have been announced by Network Rail and by Government. With our well known and well proven ability to find creative and highly cost effective civil engineering solutions, we are ideally placed to competitively tender and secure new contracts.

Stobart Air

It has been a landmark year for London Southend Airport (LSA), which is now officially recognised as London's sixth airport. We extended our partnership with easyJet and by the end of the year we expect to serve 15 easyJet destinations. It is our aim to increase further the number of destinations available in response to the recognition by both passengers and carriers of LSA's convenient location and the benefits offered by its rail link to central London.

Our relationship with Aer Arran, trading as Aer Lingus Regional under a ten year franchise agreement, provides us with an unrivalled opportunity to capitalise swiftly and highly cost-effectively on the London to North America routes via Dublin. We increased our holding in Aer Arann to 45% to drive volume into LSA. This should deliver significant revenue and profit through the airport helping to improve its value. Our next phase is to use the airline to start new routes out of LSA with focus on Spring 2014.

The current passenger terminal extension, which is the last phase of our significant investment in this operating asset. With the investment phase now completed we move to the optimisation phase to realise the inherent value in the airport. This will enable us to continue to offer an excellent passenger experience and build route numbers and volumes up towards our maximum capacity of around five million per annum.

I am pleased to report that easyJet has settled in well and that they have now taken the decision to bring the planned siting of their fourth aircraft at Southend forward to June this year, 12 months ahead of schedule.

After a fairly lengthy process, we have finally secured planning consent for the development of Carlisle Airport. The consented development includes warehousing and distribution infrastructure, runway refurbishment and associated developments. We are currently understanding route and carrier planning for Carlisle Airport and are aiming to capitalise on the business potential for London-bound traffic, as well as providing an exclusive new in-bound route for some of the Lake District's 40 million visitors each year.

Stobart Biomass

Demand for Biomass products is set to increase over the next two years as Biomass-fuelled power plants, which are currently in the confirmed planning or building phase, become operational. Robust industry intelligence informs us that the Biomass product market for existing and planned power plants totals 3.1m tonnes per annum. This volume is split between those plants currently operational at 0.2m tonnes, in-build at 0.4m tonnes and 2.5m tonnes for plants in pre-build phase. These predicted volumes evidence the opportunity for growth.

This year we have already commenced supply on a number of significant contracts, with several additional contacts already confirmed for the coming year. Our comprehensive business offering of fuel source and supply, matched with premier logistics capability, means that we are well placed to increase our rate of growth through 2013.

The strategic fit with the Group is strong with transport being such a vital ingredient in the Biomass business. This has the added benefit of expected margins in excess of our standard transport business.

The Brand

The Stobart brand is an important asset to the Group and it is important to reinforce the levels of quality and service that our brand stands for and underlines. Its status reassures our customers and partners that they are working with a business that takes time to understand their needs, a business that develops innovative and cost-effective solutions and delivers the highest quality. Our positive brand image also plays an extremely important role in building employee loyalty. Our team are happy and proud to work as part of Stobart Group; we recognise their support and reward it by helping every one of them to reach their full potential within the business.

More recently we have leveraged the brand to make big savings on insurance and legal costs by taking these functions in-house and we are now offering these services externally under the Stobart name.

We are on track. We know how important it is to deliver strong return and this is now our focus. We will continue to communicate with you through the year and look forward to sharing further good news.

Andrew Tinkler

Operational and Financial Review

Results

Group revenue from continuing operations increased to £572.4m from £491.7m in the previous year. Underlying profit before tax was £32.5m compared with £35.4m in 2012 and recorded profit before tax and discontinued operations rose to £36.0m from £29.2m in 2012. A breakdown of the divisional profit before tax is set out below.

Divisional underlying profit summary

The prior year figures have been restated to classify the chilled transport pallet network business as a discontinued operation and for completion of the accounting for the acquisition of WADI Properties Limited in accordance with accounting standards.

Autologic Holdings plc

The Group acquired 100% of the share capital of Autologic Holdings plc on 10 August 2012 for £13.0m including fees. This business contributed revenue of £69.4m and underlying profit before tax of £1.4m since acquisition.

On 21 January 2013 the Group disposed of the non-core UK Vehicle Services business for cash proceeds of £11.0m realising a profit on disposal of £8.5m.

Earnings per share

Basic earnings per share from continuing operations increased to 9.0p (2012: 8.5p) and total basic earnings per share were 5.1p (2012: 8.4p).

Taxation

The tax charge on continuing operations of £5.1m (2012: £1.4m) is at an effective rate of 14.2% (2012: 4.9%). The effective rate has been reduced by £2.3m due to the impact of the change in corporation tax rate on the deferred tax balances and by £2.2m due to the impact of the profit on disposal of the Vehicle Services division being non-taxable.

Discontinued operation

During the second half of the year the Group decided to discontinue the chilled transport pallet network business. The revenue from this discontinued activity was £45.0m (2012: £60.2m) and the loss after tax was £13.4m (2012: £0.3m). This has been shown separately in the consolidated income statement and the prior year figures have been restated for consistency. We do not expect further significant costs in relation to this business in the current year.

Statement of Financial Position

We have a strong balance sheet with net assets of £462.1m (2012: £471.0m). The net asset position was reduced by £9.5m through the purchase of treasury shares during the year.

Non-current assets

Property, plant and equipment increased to £312.2m (2012: £280.6m) principally due to the capital developments at London Southend Airport and at our Widnes site along with inclusion of the Autologic assets.

Investments in associates and joint ventures has increased to £16.1m (2012: £1.1m) following the additional investment in the restructured Aer Arann business and related aircraft financing company as well as increases in the value of property interests held. £7.1m of this investment is yet to be paid in cash.

Investment properties were carried at £89.5m (2012: £98.5m) after sales of 3 properties in the year whilst there were valuation uplifts of £5.2m on others.

Intangible assets increased to £286.2m (2012: £281.5m) following the acquisition of Autologic Holdings plc in the year. Included in intangible assets are our valuable brand names, trademarks and designs.

Funding

The net debt of the Group has increased to £216.4m (2012: £166.0m). This is principally due to capital expenditure at London Southend Airport of £23.0m, the acquisition of Autologic Holdings plc of £15.4m including fees and overdraft acquired, the purchase of treasury shares of £9.5m and joint venture investments totaling £7.0m. The net debt includes a new three year £20.0m committed revolving credit facility (drawn at £10.0m), and a new twelve month rolling £90.0m invoice discounting facility (drawn at £16.4m). There is also a new two year £3.2m property loan acquired on the Autologic transaction.

These new facilities further diversify the Group's funding base and provide additional standby liquidity and a balance of maturities complementing the existing 2020 facility with M&G UK Companies Financing Fund (drawn at £100.0m) and the 2017 Moneypenny bank loan (drawn at £77.3m).

The finance lease liabilities have increased to £39.0m (2012:£28.8m) largely due to finance leases acquired with Autologic.

The gearing ratio* is 46.8% (2012: 35.3%) and the gearing ratio ignoring fleet financing* is 38.4% (2012: 29.1%).

The Group tracks cash flow headroom and covenants on a rolling 12 month basis to ensure any issues are identified at an early stage.

*Gearing ratio: The gearing ratio is calculated as a percentage of net debt to net assets. The gearing ratio ignoring fleet financing is a percentage of net debt (excluding obligations under finance leases and hire purchase contracts) to net assets.

Cashflow

Cash generated from continuing operations was £41.4m (2012: £59.0m). The decrease is due to timing of working capital movements, in particular the late payment of a single supplier payment of £6.6m in the prior year but paid on time in the current year. Operating cash outflow from discontinued operations was £9.5m.

Cash outflow for capital expenditure in the year totalled £45.2m (2012: £93.4m). This includes development expenditure at London Southend Airport of £23.0m mainly for the new hotel and terminal extension. Other capex includes £10.6m for commercial vehicles, £5.8m further development at the Widnes multimodal site, which was partly funded by a Grant, and £3.1m for development of 37 Soho Square.

Cash received from disposal of property, plant and equipment was £23.4m (2012: £44.8m). This principally relates to disposals of commercial vehicles and a property at 22 Soho Square, London. Cash inflow from disposal of assets held for sale of £11.7m relates mainly to the disposal of the units held in One Plantation Place Unit Trust.

Interest paid in cash totalled £12.9m (2012: £4.4m). The increase from the prior year is due to the interest on the loan against the Moneypenny portfolio and also in the prior year interest was capitalised during the significant building period at London Southend Airport. Interest received totalled £0.7m (2012: £2.0m).

Dividends paid totalled £20.9m (2012: £17.6m) reflecting an increased number of shares but the same annual dividend rate of 6p (2012: 6p).

Dividends

The Board proposes a final dividend of 4p (2012: 4p) bringing the total dividend for the year to 6p (2012: 6p). Subject to approval of shareholders the final dividend will be payable to investors on record on 24 May 2013 with an Ex-dividend date of 22 May 2013 and will be paid on 5 July 2013. A scrip dividend alternative will also be made available.

Ben Whawell

Consolidated Income Statement

For the year to 28 February 2013

Consolidated Statement of Comprehensive IncomeFor the year to 28 February 2013

Consolidated Statement of Financial Position

As at 28 February 2013

Consolidated Statement of Financial Position, Continued

As at 28 February 2013

Consolidated Statement of Changes in Equity

For the year to 28 February 2013

Consolidated Statement of Changes in Equity

For the year to 29 February 2012

Consolidated Cash Flow Statement

For the year to 28 February 2013

Accounting Policies

Basis of Preparation and statement of compliance

The accounting policies have been consistently applied to all the years presented, unless otherwise stated.

The financial information set out in this preliminary announcement is derived from but does not constitute the Group's statutory accounts for the year ended 28 February 2013 and year ended 29 February 2012 and, as such, does not contain all information required to be disclosed in the financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"). The financial information has been extracted from the Group's audited consolidated statutory accounts upon which the auditors issued an unqualified opinion.

The preliminary announcement has been prepared on the same basis as the accounting policies set out in the previous year's financial statements, except as noted below.

The financial statements of the Group are also prepared in accordance with the Companies (Guernsey) Law 2008.

Stobart Group Limited is a Guernsey registered company. The Company's ordinary shares are traded on the London Stock Exchange.

The financial statements have been prepared on a Going Concern basis.

The Group's business activities, together with factors likely to affect its future performance and position, are set out in the Chief Executive Officer's Report and the financial position of the Group, its cash flows and funding are set out in the Operational and Financial Review.

The Group has considerable financial resources, together with contracts with a number of customers and suppliers. The financial forecasts show that borrowing facilities are adequate such that the Group can operate within these facilities and meet its obligations when they fall due for the foreseeable future. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current economic climate.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the forseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

Restatement of 29 February 2012 Financial Information

The results of the Chilled transport business for the year to 29 February 2012 have been restated as discontinued operations. This is required by IFRS 5 to be consistent with the treatment in the current year.

The accounting for the acquisition of WADI Properties Limited in the prior year has been amended to revise the provisional assessment of fair values at acquisition and to reflect the agreed position as set out in the completion accounts. This is a hindsight adjustment to acquisition fair values as permitted by IFRS 3.

Separately disclosed items

On 21 January 2013, the Group disposed of the non-core UK Vehicle Services business of Stobart Automotive for £11.0m. This business had been acquired in August 2012 as part of the acquisition of Autologic Holdings plc. The profit on disposal of £8.5m has been included in profit on disposal of business in the income statement.

New territory and new business set up costs of £1.0m (2012: £3.4m) comprise costs of investing in new major territories or significant areas of business to commence or accelerate development of our business presence. These costs include establishment costs, legal and professional fees, losses and certain staff and training costs. The current year costs were in relation to the development of the major new businesses at London Southend Airport. The prior year exceptional costs were in relation to the development of businesses in Ireland and also at London Southend Airport.

Transaction costs comprise the costs of making investments in new businesses or costs of financing transactions that are not permitted to be debited to the cost of investment or as issue costs. These costs include the costs of any aborted transactions.

Restructuring costs comprise costs of major integration plans and other business reorganisation and restructuring undertaken by management. Costs include cost rationalisation, brand harmonisation, site closure costs, certain short term duplicated costs, directly related management time, asset write downs and other costs related to the reorganisation and integration of acquired and new businesses. These are principally expected to be one-off in nature.

Segmental information

The operating segments within continuing operations are Stobart Transport & Distribution, Stobart Estates, Stobart Infrastructure & Civil Engineering, Stobart Air and Stobart Biomass.

The Stobart Transport & Distribution segment specialises in contract logistics including road

haulage, rail freight, ports handling and warehousing.

The Stobart Estates segment specialises in management, development and realisation of land and buildings assets.

The Stobart Infrastructure & Civil Engineering segment specialises in delivering internal and external infrastructure and development projects including rail network operations.

The Stobart Air segment specialises in operation of commercial airports.

The Stobart Biomass segment specialises in supply of sustainable biomass for the generation

of renewable energy.

The Executive Directors are regarded as the Chief Operating Decision Maker (CODM). The

Directors monitor the results of its business units separately for the purposes of making

decisions about resource allocation and performance assessment. The main segmental profit

measures are earnings before interest, tax, depreciation and amortisation and also profit

before tax both shown before separately disclosed items.

Income taxes, non-fleet finance costs and certain central costs are managed on a Group basis and are not allocated to operating segments. These costs are included in adjustments and eliminations.

Inter-segment revenues are eliminated on consolidation.

Included in adjustments and eliminations are central costs of £8,421,000 (2012: £5,440,000), intra-group profit of £1,758,000 (2012: £2,589,000) and other costs attributable to internal capital developments not capitalised in the Group accounts of £nil (2012: £1,773,000).

Also included in adjustments and eliminations are central assets and liabilities excluding assets and liabilities where it has been deemed appropriate to allocate to an operating segment.

Dividends

Dividends Paid on Ordinary Shares

A final dividend of 4.0p per share totalling £14,158,435 was declared on 16 May 2013 and subject to approval of shareholders will be paid on 5 July 2013. This is not recognised as a liability as at 28 February 2013.

Business combinations

Acquisitions in the year ended 28 February 2013

Acquisition of Autologic Holdings plc

On 10 August 2012 the Group acquired 100% of the voting rights of Autologic Holdings plc ("Autologic"), an AIM listed company based in the United Kingdom and a leading provider of distribution and technical services to the automotive industry. The business has now been rebranded as Stobart Automotive and is included in the Transport & Distribution segment.

The provisional fair value of the identifiable assets and liabilities of Autologic as at the date of acquisition have been identified as follows:

The total cost of the combination was £12.4m and was comprised of cash consideration. There was no contingent consideration as defined in IFRS 3 'Business Combinations' in connection with this acquisition.

The primary reason for the acquisition was to enter a new market for the Group. The goodwill of £5.4m is deemed to be attributable to the acquired significant presence in the automotive sector, the value of the existing management structure and workforce within Autologic and the efficiencies, costs reductions and economies of scale expected to be derived from combining Autologic with the existing operations of the Group. None of the goodwill generated on acquisition is expected to be deductible for tax purposes, although £1.0m of the pre-existing goodwill in the Autologic group remains deductible for tax.

The fair value of the acquired identifiable intangible assets in respect of customer relationships of £1.4m represents management's assessment of the value of the existing contractual and non-contractual relationships.

Transaction costs related to the acquisition of £0.6m have been recognised as an expense in the Consolidated Income Statement.

Acquisitions in the year ended 29 February 2012

Acquisition of WADI Properties Limited

On 28 February 2012 the Group acquired the entire issued share capital of WADI Properties Limited. WADI Properties Limited is an unlisted company registered in the United Kingdom and is the holding company for a number of companies whose principal activity is property investment. Transaction costs related to the acquisition of £1,044,000 were recognised as an expense in transaction costs written off in the Consolidated Income Statement.

The fair value of the identifiable assets and liabilities of WADI Properties Limited at the date of acquisition were as follows:

The net assets and the provision for deferred consideration recognised in the provisional acquisition accounting to 29 February 2012 were both based on a provisional assessment of fair values, due to the proximity of the acquisition to the Group's year end and also the incomplete status of the completion accounts process.

The assessment of fair values and the completion accounts process were both concluded in the year, which resulted in the following adjustments:

·; A reduction of £1,150,000 in the fair value of one of the investment properties acquired

·; A reduction in trade and other receivables acquired of £53,000

·; An increase in other payables acquired of £13,000

·; A reduction in the corporation tax liability of £572,000

·; An increase in the deferred tax asset of £294,000

In concluding the completion accounts process, the outstanding completion accounting issues were also resolved from the disposal of Moneypenny Limited and Westbury Schools Limited by Stobart Group Limited (then Westbury Property Fund) to WADI Properties Limited, in September 2007. The outcome of this process is a reduction of £1,017,000 in the consideration paid by WADI Properties Limited to Stobart Group Limited in September 2007. This amount is owed to WADI Properties Limited and has been incorporated into the completion accounts process for the purchase of WADI Properties Limited by Stobart Group outlined above.

As a result of the resolution of these outstanding completion accounts issues, additional consideration of £1,396,000 has become payable. The total consideration of £13,246,000 comprised the initial share consideration of £6,700,000 and the cash consideration of £6,546,000. The initial share consideration was satisfied by the issue of 5,399,742 ordinary shares at a fair value of £1.24 each. This share price was the market price at the date of acquisition.

The excess of the fair value of the assets and liabilities acquired over the cost of the acquisition represents a bargain purchase and has been recognised in the income statement, presented as 'credit for business purchase'. As a result of the above adjustments the credit for business purchase has been restated to £821,000.

Financial assets and liabilities

The obligations under finance leases and hire purchase contracts are taken out with various lenders at fixed or variable interest rates prevailing at the inception of the contracts.

The bank loans at the year end include a £100m variable rate group finance arrangement due for repayment in the following proportions; 25% May 2018, 25% May 2019 and 50% May 2020. This facility is subject to a number of financial and non financial covenants. The Group currently have a committed offer from the lender for certain amendments to these covenants, which it is in the company's control to accept, and which the directors are currently considering. Also included in bank loans is a £77.3m property loan. The property loan is due for repayment in quarterly installments ending April 2017. This loan has fixed and variable elements of £72.3m (2012: £74.8m) and £5.0m (2012: £12.9m) respectively at 28 February 2013. The bank loans also include £10m drawn on a £20m variable rate committed revolving credit facility with facility end date of Feb 2016.

Included in cash is £12.7m which is held in an asset proceeds account and as at 29 February 2013 its use was restricted to reinvestment in new property assets or repayment of the property loan.

The overdraft facility is secured on working capital and bears interest at 2.25% above the Bank of England base rate.

The variable rate invoice discounting facility is secured on receivables.

The loan notes were issued in connection with the acquisition of Stobart Biomass Products Limited on 19 May 2011 and are repayable on 23 May 2014.

The Group was in compliance with financial covenants throughout the year and the previous year.

Notes to the consolidated cash flow statement

Related Parties

Relationships of Common Control or Significant Influence

WADI Properties Limited was formerly owned by WA Developments International Limited, a company owned by W A Tinkler and W Stobart who are significant shareholders, directors and key management of the Group. On 28 February 2012, WADI Properties Limited was acquired by the group for a total consideration of £13.2m.

WA Developments International Limited is owned by W A Tinkler and W Stobart. The Group made purchases totalling £78,000 (2012: £72,000) from and sales totalling £537,000 (2012: £282,000) to WA Developments International Limited. £990,000 (2012: £789,000) was due from and £340,000 (2012: £404,000) was due to WA Developments International Limited at the year end.

VLL Limited is a subsidiary of WA Developments International Limited. During the year, the Group made sales of £17,000 (2012: £57,000) and made purchases of £826,000 (2012: £569,000) relating to the provision of passenger transport from VLL Limited. £193,000 (2012: £86,000) was owed to the Group at the year end and £100,000 (2012: £nil) was owed by the Group to VLL Limited at the year end.

During the year the Group made purchases of £550,000 (2012: £652,000) from Ast Signs Limited, a company in which W Stobart holds a 27% shareholding. A balance of £61,000 (2012: £189,000) was owed by the Group at the year end.

Associates and Joint Ventures

The Group had loans outstanding from its joint venture interest, Convoy Limited of £2,132,000 (2012: £2,132,000) at the year end of which £nil (2012: £1,053,000) has been provided for.

The Group had loans outstanding from its joint venture interest, Westbury Fitness Hull Limited of £471,000 (2012: £471,000) at the year end of which £471,000 (2012: £471,000) has been provided for.

The Group had loans outstanding from its joint venture interest Westar Limited of £1,995,000 (2012: £2,022,000) of which £1,995,000 (2012: £1,922,000) has been provided for.

The Group had loans outstanding from companies within its joint venture interest, Everdeal Holdings Limited of £3,031,000 (2012: £4,111,000) at the year end.

The Group had loans outstanding from its associate interest, Shuban Power Limited of £1,570,000 (2012: £nil) at the year end.

The Group had loans outstanding from its joint venture interest, Stobart Barristers Limited of £306,000 (2012: £nil) at the year end. During the year, the Group made purchases of £80,000 (2012: £nil) of which £54,000 (2012: £nil) was owed at the year end.

The Group made sales of £49,000 (2012: £nil) and purchases of £11,000 (2012: £nil) to its joint venture interest, Transport Service Klingels Willems NV of which £154,000 (2012: £nil) was owed to and £94,000 (2012: £nil) owed by the Group at the year end.

The Group made sales of £1,684,000 (2012: £nil) and purchases of £2,000 (2012: £nil) to its joint venture interest, Vehicle Logistics Corporation BV of which £368,000 (2012: £nil) was owed to the Group at the year end.

Post Balance Sheet Events

There are no post balance sheet events that require disclosure in the accounts.