STOB.L Regulatory News (STOB)

26 January 2015

Stobart Group Limited

("Stobart" or the "Group")

Long-term Supply Agreement with Glennmont Partners on 40.0MWe Biomass Plant

The Board of Stobart Group Limited, the Support Services and Infrastructure group, is pleased to announce the signing of a 14-year index-linked fuel supply agreement in relation to a project to construct a 40MWe waste wood-fuelled biomass plant near Margam, South Wales ('Margam'), which has successfully achieved financial close.

The fuel supply agreement is the largest supply contract by volume entered into by the Group.

Highlights

Margam is scheduled to commence operations in March 2017 and will generate revenue for the Group's Energy Division.

· Stobart Energy will source, process and supply 250,000 tonnes p.a. of recycled waste wood to Margam over 14 years equating to 3.5m tonnes over the life of the agreement (equating to a total contract value in excess of £110m).

· Stobart Energy's Transport business will also be responsible for transportation of the product delivering 250 loads each week to Margam over the 14-year agreement, generating additional revenue for the Energy Division.

· Following on from the recent announcement by the Group on the Widnes Biomass Project, the volumes to be supplied under the Margam agreement mean that we have now secured 50% of the increase required to achieve Stobart Energy's fuel supply target of 2m tonnes p.a. by 2017/18 from the 1m tonnes pa we currently supply.

· The Developer of the Project is Eco2 (developer of other biomass projects at Sleaford, Snetterton, Port Talbot and Brigg).

· The build period will be 24-26 months, with commissioning scheduled for early 2017 and operations to commence in March 2017.

· Stobart Group is not involved in the financing of the project, which is being funded by equity from Glennmont Partners and project finance from a club of lenders.

Richard Butcher, CEO Stobart Energy & Infrastructure commented, 

"This agreement secures an attractive supply contract for the Group and will contribute significantly to our target of supplying 2m tonnes of fuel per annum into the UK biomass market by 2017/18. We supply 1m tonnes per annum at present.

Coupled with the recent successful financial closure on the Group's Widnes Biomass Project, this agreement confirms we are firmly on track to achieve our strategic aims in this sector and reinforces our position as the number one supplier of biomass in the UK"

Enquiries:

Notes to Editors

· Focus on Energy and Aviation: Stobart Group is an Infrastructure and Support Services business deriving income from Energy, Aviation, Civil Engineering and Investments.  Its strategy is to drive growth and profitability in Energy and Aviation.

· Growing volumes: Stobart sources, processes and delivers fuel to power plants for third parties under long-term contracts. Revenue growth comes from the on-going increase in tonnages supplied, which exceeded 900,000 tonnes in the year to February 2014.

· Growing passenger numbers:Capital expenditure to develop London Southend Airport is largely complete with the extension of the terminal increasing capacity from one to five million passengers. Growing passenger numbers from a broadly fixed cost base will drive profitability.

· Realising value: Stobart will continue to maximise value from its property Investments to support maintained dividends.

· Value creation: The Group realised a 51% interest in its Transport & Distribution business and used the proceeds to reduce its debt significantly, invest in its Infrastructure and Energy divisions and return funds to shareholders.

· Investing for growth: Stobart plans to invest in minority stakes in sustainable biomass and anaerobic digestion plants over the next two years.

· Strong board: Stobart has a strong board led by its' Chairman Iain Ferguson CBE, former Tate & Lyle CEO along with three new Non-Executive Directors