17 Mar 2020 07:11
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
17 March 2020
STOBART GROUP LIMITED
("Stobart Group" or the "Company")
Trading Update
Stobart Group today provides the following update on trading for the year to 29 February 2020 of the Company and its subsidiaries (the "Group").
Trading summary
· The Group's core Aviation and Energy divisions' full-year performance for the financial year ended 29 February 2020 was broadly in line with management expectations;
· The non-core Rail & Civils division traded below expectations following delays to the award of new contracts through Network Rail's Control Period 6 and one legacy contract still ongoing;
· Looking forward, the demand for waste fuel to be supplied to renewable energy plants is expected to continue and the division has contingency plans in place for its workforce should the COVID-19 virus continue to spread across the UK;
· However, the short-term uncertainty driven by the COVID-19 outbreak has impacted on global airport passenger traffic generally, and London Southend Airport specifically. The airport's airline partners have cautioned that they are undertaking significant route cancellations. These actions are likely to continue on a rolling basis for the foreseeable future and could result in the grounding of the majority of airline fleets;
· There is currently no certainty regarding the extent or length of the virus' impact and it is therefore not possible to provide meaningful guidance on forecast passenger numbers for FY 2021 at this time;
· Given the current market conditions, additional liquidity is likely to be required and the Group is actively reviewing the most appropriate sources of funds to cover the period during which the airport is affected by the COVID-19 virus. In addition, the Group has moved swiftly to take measures to conserve cash and reduce its cost base in order to provide further resilience through this period;
· A number of guarantees and potential lease obligations exist between the Group and the separate subsidiaries of Connect Airways, being Stobart Air and Propius, which have been impacted by the collapse of Flybe. Stobart Group is actively evaluating how best to address and manage these liabilities and is in discussion with stakeholders regarding the most appropriate solutions; and
· The Group will update the market once there is further clarity around both the Connect Airways and COVID-19 situations.
Core operating business update
Stobart Aviation
London Southend Airport made considerable progress toward its strategic ambitions during FY 2020. Passenger numbers increased 43% to 2.1m in FY 2020 (FY19 1.5m) with London Southend Airport starting operations with Ryanair, Wizz Air and Loganair. In October 2019, commercial operations also commenced with the Company's global logistics customer, providing the opportunity to further diversify income streams.
Stobart Energy
29 out of the 30 renewable energy plants in the UK and Ireland that Stobart Energy is contracted to supply have completed the commissioning phase. With the renewable energy plants now operating more consistently as a result of completing commissioning, Stobart Energy was able to deliver 1.6m million tonnes of waste fuel in FY 2020, representing an increase of over 19% on the previous year (FY19 1.3m).
Warwick Brady, Chief Executive, Stobart Group said,
"Despite the current challenges presented by the COVID-19 virus, we continue to own and operate aviation and energy assets with significant underlying value. It is impossible to say what structural changes will occur to the aviation industry in the coming months. However, ultimately the current crisis will pass, and people will continue to want to fly in and out of one of the world's largest travel markets. Similarly, Stobart Energy is well placed to generate higher margins going forward. The capital expenditure programme has been completed, we have a robust supply chain in place, long term valuable contracts, and our renewable energy plant customers are operating more consistently. We therefore continue to believe there are significant medium and long-term opportunities to further increase the value of our assets."
The person responsible for arranging the release of this announcement on behalf of Stobart Group is Louise Brace, Company Secretary.
Enquiries:
Stobart Group Limited C/o Newgate Communications
Charlie Geller, Communications Director
Newgate Communications +44 203 757 3406
+44 203 757 6884
Giles Croot stobart@newgatecomms.com
Ian Silvera
Megan Kovach