Asset Disposal

RNS Number : 8237H

Stobart Group Limited

01 March 2010

 



Stobart Group Limited

('Stobart' or 'the Group')

STOBART REALISES £61M FROM TWO ASSET DISPOSALS AND SECURES LONG-TERM DISTRIBUTION CONTRACT WITH TESCO IN THE NORTH

Stobart Group ("Stobart" or "the Group"), the UK's leading provider of multimodal transport and logistics solutions, has agreed to dispose part of its Inland Ports asset to Legal & General Assurance (Pensions Management) Limited, for £61m rising to £62.5m on the satisfaction of further conditions.  A key element of this sale is a new 528,000 square feet, state-of-the-art sustainable distribution centre developed by Stobart Group.  This was recently announced as the new Northern distribution centre for Tesco's fresh operations. In addition, Stobart was confirmed as the transport contractor for Tesco from this distribution centre.

The asset disposal illustrates the fundamental strategy of the Stobart Group to invest in assets to develop existing and new customer relationships and then realise the value of the asset, at a profit, to reinvest elsewhere in the business. The disposal value will generate an initial return on investment in the region of 20% with the potential for further returns. This demonstrates the inherent value within the property assets held on the balance sheet of the Group. The ongoing pre-tax profit impact of the asset disposals is neutral.

The £61m is satisfied by a cash payment of which the majority will be used to repay existing borrowings with RBS and Barclays, significantly reducing the core debt in the balance sheet of the company at 28 February 2010 to around £45m.  This will allow the Group flexibility in securing the optimum debt structure for future asset developments, including the commenced capital expenditure programme at London Southend Airport. 

Stobart also expects to increase the throughput of the Inland Port terminal (currently only 50% utilised) when the site is fully operational and when the existing Valencia fresh produce rail service is extended to Widnes.  This next phase of the pioneering Stobart Rail service will allow Tesco to transport its fresh produce from Southern Spain to Northern England by rail, delivering significant environmental benefits.

In addition to the disposal of the fresh produce distribution centre, the Stobart Ports division has entered into a 25 year sale and leaseback arrangement on the Inland Port terminal. Following this, the Group expects to develop further phases on the remaining 95 acres of the Inland Port in response to customer demand.

Andrew Tinkler, Chief Executive of Stobart Group, said:

"This asset disposal illustrates a fundamental strategy of our Group which is to invest in assets in order to develop existing and new customer relationships and then realise the value of the asset, at a profit, to reinvest elsewhere in the business. At Widnes this has enabled us to gain a long-term distribution contract for Tesco and to increase the utilisation and support development of the next phases of the inland port facility. The proceeds from this asset sale, will allow the Group flexibility in securing the optimum debt structure for future asset developments, including the expansion programme at London Southend Airport."

1 March 2010

ENQUIRIES

Stobart Group Andrew Tinkler, Chief Executive Officer Ben Whawell, Chief Financial Officer	01925 605 400
College Hill Mark Garraway Gareth David	020 7457 2020

 

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