STOB.L Regulatory News (STOB)

21 May 2014

Stobart Group Limited

("Stobart" or the "Group")

Preliminary Results for the year ended 28 February 2014

Stobart Group Limited, the infrastructure and support services group, today announces its results for the year ended 28 February 2014.

Group Overview

· The Group continued with its stated strategy by realising good value from its mature assets during the year and post the year end:

o The partial realisation of a significant proportion of the Transport & Distribution division in April 2014 generated significant value, including cash and loan notes of £195.6m.

o Property realisations generated £73.5m of cash and a 23% return on investment.

o The significant net debt reduction during the year, with a net cash position following the realisations, will materially reduce future interest costs.

· The growth divisions have made good progress, with attractive returns from Estates and a solid performance from Infrastructure and Civil Engineering.Air

o Extended terminal completed at London Southend Airport with capacity now to handle over 5 million passengers per annum.

o Passenger numbers through London Southend Airport increased by 38% during the year and now exceed 1 million.

o London Southend Airport is the fastest growing airport across Europe's 368 airports for the second year running.(1)

o Rated best UK airport for customer satisfaction in Which? Magazine.

Biomass

o Biomass tonnage supplied increased by 41% to over 900,000 tonnes.

o Major new long term contracts commenced but initial commissioning issues delayed anticipated profit growth.

o Increasing supply to export markets pending future UK power plant build out.

o Entered growing small scale market supported by the recent Renewable Heat Incentive (RHI) legislation.

Infrastructure and Civil Engineering

o Completed London Southend Airport's terminal extension on time and on budget.

o Revenue from external projects up 40% with an improving order book.

Estates

o Good asset management initiatives and improving property market has resulted in solid returns.

Transport & Distribution (Biomass)

o Biomass transport retained by the Group and will be integrated into the fuel supply business to support long term contracts.

Transport & Distribution (Eddie Stobart Logistics)

o Realised 51% of the remaining transport operation on 10 April 2014, retaining a 49% interest. Reported as a discontinued operation.

o New management introduced by DBAY Advisors to support William Stobart and his existing team to take the business to its next stage.

· Impairment charge of £13.0m resulted from delays in developments, intended recategorisation of property assets and change of CGUs caused by the realisation.

Outlook

· Clear focus on growth businesses with cash reserves available to develop Energy and Aviation further.

· A portfolio of property assets to realise at the right time. The resulting cash flow and profits will contribute to dividend payments in the short term.

· Board strengthened with a new Chairman, Iain Ferguson, and Senior Independent Director, Andrew Wood, appointed during the year and three further Board members joining in July.

Financial Highlights

Note: The performance of the partially realised Transport and Distribution operation is shown as a discontinued operation but the balance sheet does not yet reflect the full impact of the transaction.

\* The results for the year end 28 February 2013 have been restated to classify the part of the Transport & Distribution business which was subject to the partial realisation transaction as discontinued operations and the related assets and liabilities are classified as held for sale.Divisional summary - continuing operations

Andrew Tinkler, Chief Executive Officer, said:

"Looking back over 2013-14, we have made significant steps to deliver value to our shareholders. Our strategy is now well set as an infrastructure and support services Group. With capital to invest and our executive team focused on our growth businesses in Energy and Aviation, we are well placed to deliver good returns for our shareholders over the next three years and on into the future."

Enquiries:

Source

(1) Airline Network News & Analysis (anna aero).

Chairman's Statement

This is my first report to you as Chairman of Stobart Group. The last twelve months have been a period of challenge, of change and of progress for the Group. There have been several significant developments including a number of well executed sales at good prices from the Estates Division and the sale of a significant proportion of the Transport & Distribution (T&D) Division. There have also been a number of changes in Board membership reflecting the evolving composition of the Group. Our strategy remains as outlined in 2011 and is focussed on building and realising shareholder value from our businesses. In this context we regularly review divisional performances against market conditions in order to make the right strategic decisions for each of our businesses at the right time.

Results

The results for the year look very different from previous years, as our part-realisation of the value in our T&D Division, subsequent to the year end, means that this element is shown as a discontinued operation. Stobart Group is now positioned as a group with subsidiaries that operate infrastructure and support services, together with a 49% associate in the formerly 100%-owned T&D Division, Eddie Stobart Logistics Ltd.

Operationally, the T&D Division and the Civil Engineering Division delivered solid results in the year. The Air and Biomass businesses achieved encouraging growth with just over 1 million passengers using Southend Airport and nearly 1 million tonnes of biomass supplied through the Biomass business. The Estates Division had a good year with several strong value realisations.

Our part-realisation of the T&D Division has resulted in certain assets undergoing revised impairment testing analysis and we have recorded an impairment of £13m in the year.

The continuing business delivered an EBITDA of £22.6m (2013: £21.3m), with net debt reducing significantly to £127.9m (2013: £216.4m). EPS from all operations has fallen to 3.3p (2013: 5.1p) due to the impairment charge.

The Board

There have been a number of Board changes over the past year.

Avril Palmer-Baunack was appointed Executive Chairman on 21 January 2013 and stood down from this role on 2 April 2013, leaving the Group on 15 May 2013.

Paul Orchard-Lisle took on the position of Interim Non-Executive Chairman between 15 May 2013 and my arrival on 1 October 2013, when he returned to his role as Non-Executive Director. Paul will stand down from the Board at the AGM.

Alan Kelsey stood down from the Board on 23 April 2013.

Andrew Wood joined the Board on 1 November 2013 as Senior-Independent Director. Rodney Baker-Bates stepped down from the Board on 31 December 2013 having served with dedication and loyalty for nearly six years, mainly as Chairman.

William Stobart stood down from the Board on 6 March 2014 and is now the CEO of Eddie Stobart Logistics Ltd. Michael Kayser will stand down from the Board at the AGM, having served as a Non-Executive Director and Audit Committee Chairman for six years.

On 1 July 2014 we will be appointing Richard Butcher to the Board as an Executive Director and John Coombs and John Garbutt as Non-Executive Directors. There will be an external review of Board effectiveness this year.

Dividend

An interim dividend of 2.0p was paid on 6 December 2013. The Board is proposing a final dividend of 4.0p per ordinary share, giving a total dividend for the year of 6.0p. As indicated at the time of the T&D partial disposal, we expect to maintain our current level of dividend payment and in the short term will fund it from property disposals.

Outlook

We coped well with a period of economic difficulty and are now positioned to capitalise on growth. The recent partial disposal of the T&D Division has enabled us to substantially repay our debt, to return cash to shareholders through a share buy back exercise and to address investment opportunities in our growth divisions. Importantly, this transaction and the resulting changed shape of our Group, with its revised structure, will allow the senior team to focus their skills and energies on accelerating growth in our Energy and Aviation businesses.

Our strong and diverse property portfolio delivers an attractive income return. The Estates Division will continue to capitalise on market-led opportunities to realise its capital and this, alongside our 49% investment in Eddie Stobart Logistics Ltd, will continue to deliver a solid return. The Rail Division's underpinning role in value creation will also remain important.

We remain committed to our strategy and believe that we are securely positioned to deliver further growth, return and value to shareholders.

Iain Ferguson CBE

Chief Executive's Report

In this past year, we have made significant steps towards the realisation of our strategy to deliver value to our shareholders. We are now in a good shape to continue to do so through focusing our attention on the key areas for growth; Energy and Aviation. Coupled with the recent consolidation of operations and assets into a new, streamlined structure following the partial realisation of a significant proportion of the Transport & Distribution Division, we are well placed to accelerate sustainable growth.

This year also provided us with the opportunity to strengthen the Board. We were able to appoint Iain Ferguson as Chair in October 2013 and subsequently Andrew Wood as Non-Executive Director and Senior Independent Director in November 2013. On 1 July 2014 we will be appointing Richard Butcher to the Board as an Executive Director and John Coombs and John Garbutt as Non-Executive Directors. The Board is now strong and has the requisite skill and expertise profile to support the planned business growth through the development of both Infrastructure and Support Services.

The part realisation of Transport & Distribution

The recent headline transaction for us has been the partial realisation of our Transport & Distribution (T&D) Division that completed in April 2014. This transaction enabled us to repay the majority of our debt, buy back a proportion of shares and focus on accelerating growth of the continuing Group. The transaction valued the business at £280.8m comprising £195.6m in cash, £44.1m in shares (giving the Group ownership of 49% of the acquiring company, with 51% owned by funds managed by DBAY Advisors) and approximately £41.1m in debt and debt-like items assumed by the purchaser. Stobart Group has retained the Eddie Stobart brand through a licence agreement, the biomass transport operations (comprising 8% of the vehicle fleet), which is being integrated into the Stobart Biomass fuel supply business, and three freehold properties used by the T&D Division. In addition, the partial disposal means our operating lease commitments have reduced by £253.6m to £41.6m.

A number of other retained assets which had links to the T&D Division had to be reviewed for impairment independently following the transaction and we have recorded an impairment charge in the year of £13m. We believe there is scope in the medium term to recover this value.

Stobart Air

2013-14 has been another period of rapid growth at London Southend Airport (LSA) with passenger numbers now exceeding 1 million. The recent completion and opening of the terminal extension has increased both capacity to 5 million passengers and our commercial offering. The new extension includes foreign exchange bureaus, duty free retail, bars and restaurants.

The creation of a new partnership with Flybe will see our joint venture airline, Stobart Air, using two branded Flybe aircraft to launch six new routes into Europe. We understand the importance of building new routes and new partnerships to help increase passenger numbers in line with our predictions. We aim to grow again in the year ahead and this passenger growth should drive our various revenue streams at the airport. Despite our passenger growth, there is still work to be done to improve profitability with renewed focus on revenue per passenger and controlling costs.

We continue to develop plans for Carlisle Lake District Airport but remain dogged by ongoing challenges around planning. The airport remains a key priority for development by our Local Authority partners who are aiming to increase inbound international visitor numbers to Cumbria and the Lake District.

Stobart Biomass

This past year has seen the consolidation of some major long term contracts for the Biomass Division, including those with Iggesund and Helius. We have also signed 15 year fuel supply agreements with biomass plants at Port Talbot and Evermore.

2013-14 saw tonnage supplied exceeding 900,000 tonnes for the year (up from circa 650,000 in 2012-13) including Solid Recovered Fuel (SRF) shipped to Denmark, and a substantial increase in road exports to both Belgium and France. The year ahead will see us consolidate our position within the biomass and renewable energy sectors, making co-investments in targeted developments where we can ensure solid and sustainable returns.

Mindful of the importance of the supply element of our Biomass business, we have retained the biomass transport business following the recent transaction. This means that our comprehensive offering of fuel source and supply, matched with premier logistics capability, remains fully intact and we are well placed to increase our rate of growth of supply throughout the year.

Stobart Estates

This has been another busy year for the Group's Estates Division which has delivered strong results against the backdrop of a very challenging property market. Cash of £73.5m was generated from sales, with a profit on disposal of £7.3m. The flagship 37 Soho Square residential development was completed, with every flat except one sold by year end. Terms have been agreed for the sale of the final flat and this is expected to complete shortly. The total profit on this development since the February 2012 acquisition is £5.5m, representing a return on investment of over 43%.

Terms were agreed in the year with GE for substantial repayment of the secured loan facility, with re-financing completed on 3 March 2014. As a result, £68.1m of debt has been repaid along with associated costs, reducing the outstanding facility to £10.7m, all on flexible variable rate terms.

In addition, the sale and leaseback of Appleton Thorn transport and warehouse sites in the year delivered a profit on disposal of £3.7m, whilst asset management initiatives and an improving property market resulted in revaluation gains of £4.2m in the year.

Stobart Estates includes the Group's airport properties. Rental income from these sites is currently very low since charges are linked to the Air Division's EBITDA.

Stobart Infrastructure & Civil Engineering

There has been an uplift of over 40% in divisional turnover to external customers in this Division and the important terminal extension at LSA was successfully completed on time and on budget. This business remains key to our ability to drive up the value of our investments by using our internal capacity to improve and build assets. We will continue to grow our portfolio of external work, principally in the rail infrastructure sector.

Transport & Distribution

T&D had a consistent year, with revenues from most business units in line with budget. New business was secured and, in part through funding awarded by government, we are working to deliver fuel and carbon reductions. With William Stobart at the helm, alongside the DBAY team, the new business of Eddie Stobart Logistics Ltd is in a great position to deliver future growth.

The Stobart Brand

Our recognition of the importance and value of the Stobart brand, alongside the inherent values, underpinned our decision to retain ownership of this as part of the transaction to dispose of 51% of Transport & Distribution. The Stobart brand remains an important asset to the Group, but through the brand licence with Eddie Stobart Logistics Ltd, of which we remain a 49% shareholder, this business is still able to draw on its iconic status with customers by continuing to operate under the same livery and name.

Stobart Group's positive brand image also plays an extremely important role in building employee engagement and loyalty. Our team is happy and proud to be 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.

Our Stobart Group and Eddie Stobart brands have been officially recognised as 'Business Superbrands', and in 2014 Eddie Stobart was nominated as the leading brand in the 'Supply Chain, Distribution and Freight Services' category. An accredited Superbrand is considered to have established the best reputation in its market, providing its customers with both tangible and intangible advantages over its competitors. Eddie Stobart has gained this premium status because it has the highest reputation for quality, service, performance and sustainability; clearly marking it out from the competition for this prestigious award. These values of quality, service, performance and sustainability are those inherent in our brands and bear a direct relationship to their value.

Outlook

Looking back over 2013-14, we have made significant steps to deliver value to our shareholders. Our strategy is now well set as an infrastructure and support services Group. With capital to invest and our executive team focused on our growth businesses in Energy and Aviation, we are well placed to deliver good returns for our shareholders over the next three years and into the future.

Andrew Tinkler

Operational & Financial Review

Results Summary

This year's financial results look quite different compared with last year's, with the results of a substantial proportion of Transport & Distribution Division being included in discontinued operations in the current year and the prior year figures restated accordingly. The partial disposal was a significant realisation for the Group, but at the same time management was not distracted from the continuing business and underlying profitability has held strong.

Group revenue from continuing operations increased to £99.2m, from £76.8m in the previous year. Underlying EBITDA increased to £22.6m from £21.3m and underlying operating profit was £16.9m compared with £16.3m in 2013. Finance costs (net) increased to £11.5m from £10.0m as the amount of capitalised interest reduced by £1.0m and the average net debt was slightly higher across the year. The recorded loss before tax from continuing operations was £10.2m (2013: profit £3.0m) following a charge of £13.0m for impairment of assets.

As we move forward we expect EBITDA to be a key financial measure to our new Divisions. The divisional EBITDA figures (see table below) show progress in the Divisions but there is more work to do to drive further profitability from our assets and our brands. There was another strong performance in our Estates Division with several realisations at profitable values which enabled the Group to reduce net debt significantly.

The prior year figures have been restated to classify the disposed Transport & Distribution business as discontinued. The Environmental Transport business, which comprises the fleet of chipliner and walking floor vehicles, is retained and is included in the Transport & Distribution result in the table below. This business provides transport services for our Biomass fuel supply business as well as third party customers. In addition there has been a minor restatement in the accounting for the defined benefit pension scheme as required by the revised accounting standard IAS 19.

Partial disposal of the Transport & Distribution Division 

After the year end, on 10 April 2014, the Group disposed of a controlling interest in the Transport & Distribution business for gross consideration of £239.7m. This was a mature business comprising the Eddie Stobart branded transport and logistics operations, the Stobart Automotive operations and the Widnes rail freight terminal operation. The transaction leaves the Group with a remaining 49% interest in this business, which we expect to account for as an associate in future periods. The results of this disposed business are classified in discontinued operations in the Consolidated Income Statement. Revenue for the business was £559.7m (2013: £495.6m) and underlying profit before tax was £25.3m (2013: £25.9m).

The assets and liabilities in relation to this business at the year end are classified in the Consolidated Statement of Financial Position as 'held for sale'. The net assets of the business at the year end were £193.5m including £165.7m of goodwill.

Impairment of Assets

As a result of the partial disposal of the Transport & Distribution business, certain assets will be recategorised from property, plant and equipment to investment properties and other assets are included in different Cash Generating Units (CGUs) for impairment testing purposes. This has resulted in an impairment charge of £13.0m being recorded in arriving at loss before tax from continuing operations. The impairment of £4.8m in respect of the Ports Operation assets has been caused partly by the expected changes in activities at the sites following the classification as held for sale of a substantial part of the Transport & Distribution Division, and partly due to the delayed timing of development at the Widnes site. The impairment in respect of Carlisle Lake District Airport of £4.3m amounted to a significant proportion of the planning and interest costs which have been capitalised to date. There have also been impairments of two other property assets which, at the year end, were mostly occupied by the Transport & Distribution Division, but following the partial disposal of that Division, will be classified as investment properties and will be carried at fair value.

Business Segments

The business segments reported in the financial statements for the year are the same segments as reported in 2012-13 as this reflects the way in which the Group was managed during the year. Going forward for the current year to 28 February 2015 we expect to report under revised segments which better represent the operational and reporting structure of the business following the part realisation of the Transport & Distribution business. The Group is now positioned in Infrastructure and Support Services with income derived from Infrastructure, Energy, Aviation, Rail and Investments. We expect that EBITDA will continue to be a key financial performance measure.

Earnings Per Share

Basic earnings per share from continuing and discontinued operations were 3.3p (2013: 5.1p).

Taxation

The tax credit on continuing and discontinued activities of £0.5m (2013: £0.8m charge) is at an effective rate of -4.8% (2013: 4.4%). The effective rate has been reduced by £3.1m owing to the impact of the change in corporation tax rate on deferred tax balances and by £1.3m owing to profits on property disposals which were not taxable but offset by non tax-deductible amounts.

Statement of Financial Position

We have a strong balance sheet with net assets of £461.1m (2013: £462.1m). The net asset position was improved by £8.6m through the sale of treasury shares during the year but adversely affected by the charge for impairment of assets.

Non-Current Assets

Property, plant and equipment of £246.6m (2013: £312.2m) principally comprise the land and buildings at London Southend Airport, Carlisle Airport and the development sites at Widnes Multimodal Gateway and Runcorn Port of Weston, the latter two of which are partly rented to the Transport & Distribution business. The Group has retained three other freehold properties used by the disposed Transport & Distribution business which will be reclassified as investment properties after the disposal.

Investments in associates and joint ventures of £15.8m (2013: 16.1m) comprise the equity investments in a company which leases aircraft to Stobart Air, and also a green energy development. There were also balances owed by associates and joint ventures of £5.1m (2013: £4.9m) which at the year end represented balances due from green energy investments.

Intangible assets of £120.2m (2013: £286.2m) comprise the brands and remaining goodwill after a considerable proportion of the goodwill in relation to the Transport & Distribution Division has been included in assets held for sale. Following the disposal the Group has retained ownership of all of the Stobart brand names, trademarks and designs and the Eddie Stobart brands are licensed to the disposed business under a licence agreement. The remaining goodwill principally relates to the Biomass business.

Current Assets

Current assets (excluding assets of disposal groups held for sale) of £102.6m (2013: £166.9m) includes £10.7m of cash and £68.1m of restricted cash. After the year end this restricted cash was used to substantially repay the property loan held with GE Real Estate Finance Ltd.

Disposal Groups

Assets of disposal groups held for sale of £342.5m comprise £328.4m in respect of the disposed Transport & Distribution business and £14.1m in respect of five properties which are being marketed for sale. Liabilities of disposal groups held for sale of £134.9m comprise the liabilities of the disposed Transport & Distribution business.

Funding

The net debt of the Group at year end has decreased to £127.9m (2013: £216.4m) plus £19.8m which is included in the disposal group. The reduction in the year is principally due to the realisation of proceeds from the disposal of six properties during the year for proceeds of £73.5m.

Following the year end, the £100m development loan with M&G Investment Management has been fully repaid from proceeds of the Transport & Distribution transaction, and £68.1m of the GE property loan has been repaid out of restricted cash. After the part disposal the Group has a net cash position with over £35m of borrowing facilities available.

The gearing ratio based on a percentage of net debt to net assets at year-end is 27.7% (2013: 46.8%). The operating lease commitments have reduced to £41.6m from £295.2m following the disposal of the Transport & Distribution business.

Cashflow

Cash generated from continuing operations was £7.8m (2013: £8.7m). Operating cash inflow from discontinued operations was £26.1m (2013: £23.9m).

Cash outflow for capital expenditure in the year totalled £17.0m (2013: £31.2m). This includes development expenditure at London Southend Airport of £14.1m mainly for the new terminal extension. Other capital expenditure includes £2.2m for development of the investment property portfolio.

Cash received from the disposal of property, plant and equipment and investment property was £71.0m (2013: £11.0m). This includes £64.3m in respect of disposals of investment property assets.

Finance costs paid in cash (net) totalled £13.7m (2013: £10.8m) and was higher than expected as the negotiations with GE to repay the property loan took longer than expected.

Dividends paid in cash totalled £20.5m (2013: £20.9m), the reduction due to the partial uptake of a scrip option for the final dividend but with the same annual dividend rate of 6p (2013: 6p).

Dividends

Dividends are expected to be maintained at the current level in the foreseeable future and, in the short term, partly funded out of proceeds from disposals of property assets. The Board proposes a final dividend of 4.0p (2013: 4.0p) bringing the total dividend for the year to 6.0p (2013: 6.0p). Subject to the approval of shareholders the final dividend will be payable to investors on record on 30 May 2014 with an ex-dividend date of 28 May 2014 and will be paid on 4 July 2014.

Ben WhawellConsolidated Income Statement

For the year to 28 February 2014

For an explanation of the restatement of the 2013 results, please see notes.

Consolidated Statement of Comprehensive IncomeFor the year to 28 February 2014

Consolidated Statement of Financial Position

As at 28 February 2014

Consolidated Statement of Financial Position, Continued

As at 28 February 2014

Consolidated Statement of Changes in Equity

For the year to 28 February 2014

Consolidated Statement of Changes in Equity

For the year to 28 February 2013 (Restated)

Consolidated Cash Flow Statement

For the year to 28 February 2014

Consolidated Cash Flow Statement, Continued

For the year to 28 February 2014

Notes to the Consolidated Financial Statements

For the year to 28 February 2014

Accounting Policies of Stobart Group Limited

Basis of preparation and statement of compliance

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 2014 and year ended 28 February 2013 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.

Going Concern

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.

Following the partial disposal of a significant proportion of the Transport & Distribution business, a significant amount of the Group's loans and borrowings were repaid.

The Group has considerable financial resources, together with contracts with a number of customers and suppliers. The financial forecasts show that the Group's remaining 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. The Group actively manages its short and long term funding requirement through various forecasting procedures.

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 28 February 2013 Financial Information

The results for the year ended 28 February 2013, of the part of the Transport & Distribution business which was disposed of post year end, have been restated as discontinued operations and the related assets and liabilities are reclassified as held for sale. This is required by IFRS to be consistent with the treatment in the current year. See note 4 for further details.

A restricted cash balance of £68,130,000 (2013: £12,755,000) has been reclassified to show it separately on the face of the Consolidated Statement of Financial Position, and the Consolidated Cash Flow Statement has been restated accordingly. This change has made no difference to the net assets or net debt at either year end.

With effect from 1st March 2013, the Group was required to take account of the revised accounting standard, IAS 19 - 'Employee Benefits'. This change impacts the Group by amending disclosure requirements and replacing the expected return on plan assets and interest cost on plan obligations with net interest on the net defined benefit liability based upon the discount rate. The specific lines affected by this restatement in the Consolidated Income Statement for the year ended 28 February 2013 are finance costs, which increased by £113,000, finance income, which decreased by £103,000, and the tax charge which decreased by £50,000. The effect of the restatement on the Consolidated Statement of Financial Position is not deemed to be material and as such the presentation of a third balance sheet as indicated by IAS 1 is not considered necessary.

Certain liabilities which were previously classified as 'other liabilities' have been classified as 'provisions' to better reflect the uncertain nature of these liabilities. This has had the impact of reducing other liabilities at 28 February 2013 by £2,985,000 and increasing provisions by the same amount, with no change to net assets. See Note 25 for further details.

Separately Disclosed Items

The Group presents separately on the face of the income statement material items of income and expense, which because of their nature, infrequency or occurrence, or the events giving rise to them, merit separate presentation to allow shareholders to better understand the financial performance of the year. Underlying operating profit is stated before separately disclosed items and share based payments.

Segmental information

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

During the year the Stobart Transport & Distribution segment specialised in contract logistics. A substantial proportion of the Transport & Distribution division has been included in discontinued operations in the current year, following the disposal post year end of the Group's controlling interest of part of this business. The remaining continuing Transport & Distribution segment comprises principally the Environmental Transport operation, which has been retained post disposal of the rest of the Transport & Distribution operation.

The Stobart Estates segment specialises in the management, development and realisation of land and buildings assets for owner occupied and third party tenanted properties

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 the operation of commercial airports.

The Stobart Biomass segment specialises in the 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 each business unit 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.

No segmental assets or liabilities information is disclosed because no such information is regularly provided to, or reviewed by, the Chief Operating Decision Maker.

Inter-segment revenues are eliminated on consolidation.

Included in adjustments and eliminations are central costs of £8,599,000 (2013: £7,514,000) and intra-group profit of £542,000 (2013: £1,758,000).

Discontinued Operations

The group disposed of a controlling interest in a substantial proportion of the Transport & Distribution division on 10 April 2014. The group has retained a 49% interest in the business, which is expected to be accounted for as an associate in future periods. The Environmental Transport business unit, which was previously part of the Transport & Distribution division, was also retained.

The chilled pallet network business unit, which was closed in the prior year, and reported as a discontinued operation in that year, previously formed part of the Transport & Distribution business. These businesses have been reported separately as a single amount presented within discontinued operations. The operations both represented separate major lines of business.

The profit from discontinued operations of £21,929,000 (2013: £13,986,000) is attributable to the owners of the Company, with the exception of £10,000 (2013: £3,000) that is attributable to the minority interest. There was no loss recorded on remeasurement to fair value less costs to sell.

Dividends

A final dividend of 4.0p per share was declared on 21 May 2014 and subject to approval of shareholders will be paid on 4 July 2014. This is not recognised as a liability as at 28 February 2014.

Of the £13,891,000 dividend in July 2013, £334,000 was settled by the issue of shares under a scrip offer.

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 £100,000,000 variable rate group finance arrangement. The terms of this loan were amended in May 2013 such that it would be repayable in £5,000,000 quarterly instalments as from 31 May 2014. This loan was fully repaid on 11 April 2014. Also included in bank loans is a £74,864,000 (2013: £77,286,000) property loan. The property loan was originally due for repayment in quarterly installments ending April 2017. This loan had fixed and variable elements of £69,828,000 (2013: £72,328,000) and £5,036,000 (2013: £4,958,000) respectively at 28 February 2014. The bank loans also include £15,000,000 drawn on a £20,000,000 variable rate committed revolving credit facility with a facility end date of February 2016.

Included in cash is £68,130,000 (2013: £12,755,000) of 'Restricted cash' which is held in an asset proceeds account and at 28 February 2014 its use was restricted to reinvestment in new property assets or repayment of the property loan. This Restricted cash was used to repay a substantial proportion of the £74,864,000 property loan on 3 March 2014.

The loan notes were issued in connection with the acquisition of Stobart Biomass Products Limited on 19 May 2011. These loan notes were fully repaid on 5 March 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

WA Developments International Limited is owned by WA Tinkler. During the year, the Group paid rent of £20,000 (2013: £78,000) and levied recharges of £119,000 relating to the recovery of staff costs and expenses (2013: £537,000) to WA Developments International Limited. £48,000 (2013: £990,000) was due from and £11,000 (2013: £340,000) was due to WA Developments International Limited at the year end.

In addition, the group received rent of £nil (2013: £281,100) from WA Developments International Limited under a rent guarantee arrangement. This guarantee was a term of the acquisition by the Group of WADI Properties Limited from WA Developments International Limited on 28 February 2012 and expired on 28 February 2013.

Apollo Air Services Limited is owned by WA Tinkler. During the year, the Group made purchases of £407,000 (2013: £nil) from Apollo Air Services Limited relating to the provision of passenger transport. £29,000 (2013: £nil) was owed by the Group to this company at the year end.

VLL Limited is owned by WA Tinkler. During the year, the Group made sales of £20,000 (2013: £17,000) relating to fuel and made purchases of £434,000 (2013: £826,000) relating to the provision of passenger transport. £nil (2013: £193,000) was owed to the Group at the year end and £nil (2013: £100,000) was owed by the Group at the year end.

During the year the Group made purchases of £254,000 (2013: £550,000), relating to the provision of branded products and vehicle advertising, from Ast Signs Limited, a company in which W Stobart holds a 27% shareholding. A balance of £40,000 (2013: £61,000) 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 (2013: £2,132,000) at the year end.

The Group had loans outstanding from its joint venture interest, Westbury Fitness Hull Limited of £471,000 (2013: £471,000) at the year end, of which £471,000 (2013: £471,000) has been provided for.

The Group had loans outstanding from companies within the group headed by its joint venture interest, Everdeal Holdings Limited, of £782,000 (2013: £3,031,000) at the year end. During the year, the Group made sales of £615,000 (2013: £1,692,000) to a 100% subsidiary of Everdeal Holdings Limited. A balance of £202,000 (2013: £262,000) was owed to the Group at the year end. The interest receivable during the year was £174,000 (2013: £494,000).

The Group had loans outstanding from its associate interest, Shuban Power Limited, of £4,281,000 (2013: £1,570,000) at the year end. The interest receivable during the year was £264,000 (2013: £nil).

The Group had loans outstanding from its associate interest, Shuban 6 Limited, of £802,000 (2013: £nil) at the year end. The interest receivable during the year was £28,000 (2013: £nil).

The Group had loans outstanding from its joint venture interest, Stobart Barristers Limited of £567,000 (2013: £306,000) at the year end of which £500,000 (2013: £nil) has been provided for. During the year, the Group made purchases of £88,000 (2013: £80,000) from Stobart Barristers Limited of which £9,000 (2013: £54,000) was owed at the year end.

The Group made sales of £3,155,000 (2013: £1,684,000) and purchases of £nil (2013: £2,000) to its joint venture interest, Vehicle Logistics Corporation BV of which £136,000 (2013: £368,000) was owed to the Group at the year end. All balances outstanding at 28 February 2014 were included within the disposal group classified as held for sale.

Post Balance Sheet Events

On 10 April 2014 the Group completed the disposal of a controlling interest in a substantial proportion of the Transport & Distribution division, to funds managed by DBAY Advisors, for proceeds of around £195,600,000 before transaction costs. The Environmental Transport business unit has been retained. The Group retains an economic interest of 49% in the business, which is expected to be accounted for as an associate in future periods. The Group has retained the ownership of the Eddie Stobart brand and the business will continue to use these brands under a licence agreement. The Group has also retained a number of freehold properties which have been leased to the business on an arms-length basis.

Following the disposal, on 11 April 2014, the £100,000,000 variable rate loan with M&G Investment Management Limited was fully repaid and the facility terminated.

On 3 March 2014, £68,130,000 of the Restricted Cash held at 28 February 2014 was used to repay a substantial proportion of the property loan with GE Real Estate Finance Limited, plus payment of fees. At the same time the terms of the remaining debt were renegotiated and the facility was reduced commensurately.