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8 March 2018
STOBART GROUP LIMITED
('Stobart Group' or 'the Group')
Pre-Close Trading Statement and Confirmation of Quarterly Dividend
Stobart Group, the infrastructure and support services business, issues the following pre-close trading statement prior to the announcement of the full year results for the 12 months to 28 February 2018, which is expected to be made on 10 May 2018.
Stobart Group is an entrepreneurial business that delivers strong returns to shareholders. Its strategy is to use disposals from its Infrastructure and Investment divisions to support the dividend to 2022, at which point the dividend will be supported through income from its growing operating divisions; Aviation, Energy and Rail.
· Aviation - 25% increase in passengers at London Southend Airport. Stobart Group continues to invest in its strategy of identifying opportunities to tackle London capacity constraints and improve passenger experience
· Energy - Volume targets should be achieved during 2018. Majority of new third party power plants are either burning fuel or about to commence burn. The division is trading ahead of its EBITDA per tonne targets
· Rail - On track to deliver EBITDA targets on rail and civil engineering projects. Supporting growth at Carlisle Lake District and London Southend Airports
· Infrastructure/Investments - Continuing to realise cash in order to support the dividend through to 2022
· Quarterly dividend maintained at 4.5p per share
Stobart Group invests in, develops and operates a number of aviation-related businesses focused on meeting the growing demand for increased airport capacity and improved customer experience. It owns and operates London Southend and Carlisle Lake District Airports, Stobart Air and Stobart Aviation Services.
London Southend Airport
London Southend Airport welcomed more than 1 million passengers in calendar year 2017, representing a 25% increase on 2016. Passenger numbers are expected to grow further with the recent agreement for Air Malta to launch three new routes from London Southend Airport from 4 May, flying to Malta, Sardinia and Sicily.
In January 2018 we launched a new executive jet fixed based operation (FBO) at London Southend Airport, expected to cater for 5,000 flights per year by 2022.
The group intends to invest up to £40m over FY18 to FY21 in awareness, route development, branding, marketing and airline incentive deals at London Southend Airport, of which we have invested around £10m in FY18.
Carlisle Lake District Airport
Carlisle Lake District Airport will open for passengers for the first time in Summer 2018.
Stobart Air continued to make good progress, operating flights on behalf of its partners, Aer Lingus and FlyBe, carrying 1.7 million passengers. Stobart Air appointed industry veteran Conor McCarthy as Non-Executive Chairman of its board in January 2018. In February its contract to operate the Dublin-Donegal and Dublin-Kerry Public Service Obligation (PSO) routes, under the Aer Lingus Regional brand, was renewed.
Stobart Aviation Services
Stobart Aviation Services provided check in services for 0.6 million passengers at London Southend Airport and ground handling services to 11,949 aeroplane movements. It also secured a contract to provide aviation services to easyJet at London Stansted which began on 1 March 2018, worth circa £4m per annum.
The Company has successfully deployed its logistics experience to put in place a renewable energy fuel supply chain to supply 2m tonnes of renewable energy fuel to power stations across the UK. Certain of these power stations experienced commissioning delays. However, more stations are now coming on-line and Stobart Energy has successfully proven its business model.
Stobart Energy is now delivering at a run rate of c1.3m tonnes p.a. of renewable energy fuel in January and February 2018, and has customer contracts for a further 0.8m tonnes p.a. once plants become operational. Stobart Energy has closely managed its costs and EBITDA margin per tonne is ahead of target, with a defined plan for delivering targets for 2022 now in place.
Rail and Civil Engineering
The Rail division continues to develop its pipeline of third party civil works, and, by applying its civil engineering expertise, adding value to the wider Group. Stobart Rail is constructing the terminal at Carlisle Lake District Airport, which is due to be completed in June 2018, and worked to upgrade the car park and stands at London Southend Airport.
Stobart Rail also continued to develop its relationship with Network Rail, winning various devegetation contacts totaling £6m, winning framework contracts in London Northwest, London Northeast and Scotland and appointed participant in the Transpennine route upgrade. There was minimal financial exposure from contracts with Carillion.
Infrastructure and Investments
Stobart Group aims to use disposals from its Infrastructure and Investment divisions to support the dividend. During the period, the Infrastructure division completed four disposals including the Park Royal, London Southend Airport Hotel and Rotherham properties, as well as the Group's investment in the Port Talbot biomass plant. These disposals realised a total of £27.3m in cash, of which £2.3m remains outstanding at the year end. The Group's investment in Eddie Stobart continued to perform satisfactorily, with that company reporting a 12% YoY increase in revenues.
We reported in the AGM statement in June an expectation to pay an increased quarterly dividend of 4.5p per share, starting with the payment made on 7 July 2017. Dividends of 4.5p per share were paid on 6 October 2017 and 19 January 2018. The Board has now declared a further interim dividend of 4.5p per share which will be paid on 13 April 2018 to shareholders on the register as at 23 March 2018.
The Board remains confident of the Group's performance and prospects and, subject to Board approval, a further quarterly dividend of 4.5p per share will be made on 6 July 2018. The Group has non-operating asset resources available to support the dividend until 2022, and thereafter dividends are expected to be funded out of operating cash flow.
Warwick Brady, Chief Executive of Stobart Group, said: "Stobart Group has made good progress during the last year. We continue to see growth in our aviation division, with a 25% increase in passengers at London Southend Airport, 10% increase in passenger numbers flying via Stobart Air, and we are excited to be welcoming passengers at Carlisle Lake District Airport from Summer of this year.
"Stobart Energy has proven its model and is on track to deliver at a run rate of 2m tonnes of renewable energy fuel per year by the end of 2018 and Stobart Rail continues to add value across the Group. We continue to realise value from our infrastructure and investment divisions and these disposals are expected to support the dividend up until 2022, when we expect our operating divisions to meet their targets for EBITDA contribution."
Stobart Group Limited C/o Redleaf Communications
Warwick Brady, CEO
Redleaf Communications +44 207 382 4730
Charlie Geller Stobart@redleafpr.com
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