Biomass Supply Agreement and Trading Update

RNS Number : 3248G

Stobart Group Limited

03 March 2015

 



3 March 2015

STOBART GROUP LIMITED

('Stobart' or 'the Group')

Biomass Supply Agreement and Trading Update

Stobart signs 260,000 tonnes per annum index-linked 20 year biomass contract

Stobart Group today announces the signing of its third major biomass supply contract in four months.

This contract in Rotherham, South Yorkshire, with Brite Partnership (North East) Limited will see the Group supply and transport 5.2m tonnes of waste wood to a 40MWe biomass plant over the term of the contract, and starts in 2017.

This latest agreement gives clear visibility of the biomass tonnage the Group will be supplying by 2017 of 1.75m p.a. against our target of 2m, with further projects in the pipeline.

Stobart Group is not involved in the financing of the project, although we expect the project to achieve financial close in the next two weeks.

Richard Butcher, CEO Stobart Energy & Infrastructure, commented

"This agreement means that in the last four months alone we have secured additional supply volumes for the Stobart Energy division totalling some 750,000 tonnes per annum from 2017 onwards through three long-term, index-linked contracts. We continue to strengthen our market leading position in the biomass supply market and are encouraged by the momentum in this business. The Group has quickly established itself as the fuel supplier of choice in the rapidly developing biomass power market."

Trading update

Stobart is pleased to announce that underlying trading for our operating businesses is in line with management expectations.

Energy

Three major biomass fuel supply contracts have been secured in the last four months providing significant revenue for this division over the life of the agreements. This includes the 20 year supply agreement for 260,000 tonnes p.a. as announced above.

In January we announced an agreement to supply 250,000 tonnes of waste wood p.a. to a biomass plant to be constructed at Margam, South Wales. In November 2014 we announced an agreement to supply 146,000 tonnes of waste wood p.a. to a biomass plant currently under construction in Widnes. In addition, at Widnes, we will source from arboricultural arisings and undermanaged woodland a further 140,000 tonnes of waste wood for an adjacent drying operation. The 90,000 tonnes of dried product will be supplied to the biomass market.

Aviation

Passenger numbers at London Southend Airport increased by 9% to 1.09m during the year. Passenger numbers on existing operations are likely to be slightly lower in the next six months. However discussions with existing airlines and a number of new airlines should together bring strong sustainable growth in volumes in the coming years. Airlines are attracted by the peak time capacity availability and superfast point-to-point travel experience.

The Airport was rated best UK airport in Which? customer satisfaction survey for the second year running.

We are also exploring revenue opportunities in non-passenger-related activities from the unused land not required for the airport operation.

Stobart Air, of which Stobart Group owns 45%, has recorded increased passenger numbers for 18 consecutive months up to December 2014, when compared with the equivalent month in the prior year.

Rail, Infrastructure and Investments

The Rail division continues to grow revenues with external customers on railway related projects.

The division has recently been awarded a contract by Burmeister & Wain Scandinavian Contractor AS for civils work on the biomass plant at Widnes and we will be constructing a dryer facility for the Group at Widnes with a combined contract value of around £15m over the next 18 months.

In addition, work has commenced on the construction of the £12m distribution centre at Carlisle Airport for completion in September 2015, and work has commenced on ground investigation works and design for potential future airport developments.

The Infrastructure division has realised cash of £26.4m from profitable property sales over the past 12 months and we have continued to invest in green energy plants and processing sites in line with our strategy.

Our investments in Eddie Stobart Logistics and in Propius have performed well over the year.

Andrew Tinkler, Chief Executive Officer, said

"This has been another year of growth for our Energy and Aviation divisions. The Group has recently secured three major biomass fuel supply contracts. As a result we are now over 85% toward our target of supplying two million tonnes per annum by 2017. Our investment in London Southend Airport is now largely complete and we are well placed to grow the profitability of that business. The airport serves over one million passengers per year, and as a result of our recent investment, now has capacity in its terminal to serve five million passengers. The Infrastructure and Rail divisions are both performing well with opportunities to develop. We have realised £26.4m in cash from property sales in the past year and we have plans for further disposals in the year ahead."

The announcement of results for the year ended 28 February 2015 is expected to be made on 14 May 2015. The close period will commence on 14 March 2015.

Enquiries:

Stobart Group	[phone]
Andrew Tinkler, Group Chief Executive Officer Richard Butcher, CEO Energy & Infrastructure
Redleaf PR	[phone]
Emma Kane Rebecca Sanders-Hewett Charlie Geller	[e-mail]
influence Associates	[phone]
Stuart Dyble James Andrew

Notes to Editors

Stobart Group is focused on energy, aviation and infrastructure.

The Group owns and operates London Southend Airport, the capital's newest airport flying to 25 destinations across Europe. In 2014 the airport was rated best UK airport in the Which? customer satisfaction survey for the second year running. There were 1.1m passengers in the year to 28 February 2015.

Stobart Group is the number one supplier of biomass in the UK. The Group sources and delivers fuel to biomass plants under long term contracts. Stobart Group has agreements in place to deliver 1.75m million tonnes of fuel per annum to the UK biomass market and aims to supply two million tonnes per annum by 2017/2018.

At its Interim Results for the six months ended 31 August 2014, the Group maintained an interim dividend of 2.0p (2013: 2.0p) per share. Stobart Group expects to maintain its dividend through the proceeds from disposals of its property investments.

 

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