Interim Results

RNS Number : 0421D

Stobart Group Limited

22 October 2015

 

22 October 2015

Stobart Group Limited

("Stobart" or the "Group")

Interim Results for the six months ended 31 August 2015

Stobart Group Limited, the support services and infrastructure group, today announces its interim results for the six months to 31 August 2015.

Group overview

Stobart is an entrepreneurial company applying its recognised logistics and customer service expertise to create:

•        The UK's leading supplier of waste wood biomass fuel to renewable energy plants

·        A major new London airport in Southend with peak time capacity

·        A leading civil engineering provider to Network Rail

·        A diverse portfolio of investments, infrastructure and property assets

Operational highlights

·        On track with current work and secured future contracts, to exceed target of supplying 2m tonnes of biomass fuel per annum by 2018

·        London Southend Airport voted best airport in Britain by Which? for third consecutive year

·        Aviation industry specialists, Glyn Jones and Jon Horne appointed CEO and COO respectively of Stobart Aviation

·        Stobart Rail completed construction of air/road freight distribution centre at Carlisle Lake District Airport

·        Worcester property disposed of generating net proceeds of £6.2m

Financial highlights

·        Revenue from continuing operations unchanged at £57.6m (2014: £57.6m)

·        Underlying EBITDA up 3.4% to £9.0m (2014: £8.7m)

·        Cash generated from continuing operations increased to £2.3m (2014: £0.6m outflow)

·        Net debt of £51.9m comprising vehicle financing of £29.7m and other debt of £22.2m, giving gearing to equity of 13.2%   

·        Underlying earnings per share from continuing operations increased to 1.58p (2014: 0.97p)

·        Proposed interim dividend of 2.0p (2014: 2.0p) per ordinary share

Chief Executive Andrew Tinkler commented:

"We have continued to focus primarily on delivering value in our two high growth divisions of Energy and Aviation, and we are progressing well with building the infrastructure and relationships to successfully develop these businesses. 

Our other divisions are performing well with a strong order pipeline in the Rail division, growing profitability in Investments and realising cash from property sales.

In line with our commitment of driving shareholder value, we returned £13.1m to shareholders in dividends in the period, and we have the foundations in place to deliver on our strategic goals."

Enquiries:

Stobart Group	c/o Redleaf Communications
Andrew Tinkler, Chief Executive Officer Ben Whawell, Chief Financial Officer
Redleaf Communications	[phone]
Charlie Geller Emma Kane Joanna Brown	[e-mail]
Influence Associates	[phone]
Stuart Dyble James Andrew

Stobart Group Limited

("Stobart" or the "Group")

Interim Results for the six months ended 31 August 2015

HALF YEAR REVIEW

Results summary

Results for the six months to 31 August 2015 were as follows:

		Six months to 31 August 2015 £'m	Six months to 31 August 2014 £'m
Revenue from continuing operations		57.6	57.6
Underlying EBITDA*		9.0	8.7
Underlying profit before tax		4.6	4.4
Profit/(loss) before tax from continuing operations		0.6	(8.6)
Profit from discontinued operation (net of tax)		-	7.6
Earnings per share from underlying continuing operations		1.58p	0.97p
Earnings per share		0.35p	0.02p

Divisional underlying profit summary

	31 August 2015	31 August  2014
	£'m	£'m
Energy	4.1	2.8
Aviation	0.4	1.4
Rail	0.9	1.2
Investments	6.4	3.2
Infrastructure	0.7	2.4
Central costs and eliminations	(3.5)	(2.3)
Underlying EBITDA*	9.0	8.7
Depreciation	(3.9)	(3.1)
Underlying operating profit	5.1	5.6
Finance costs (net)	(0.5)	(1.2)
Underlying profit before tax	4.6	4.4
Non-underlying items**	(4.0)	(13.0)
Profit/(loss) before tax from continuing operations	0.6	(8.6)

* Underlying EBITDA is normalised comprising the underlying operating profit of £5.1m (2014: £5.6m) and adding back depreciation of £3.9m (2014: £3.1m).

** Non-underlying items comprise amortisation of acquired intangibles (brands) of £2.0m (2014: £1.9m), new business and new contract set up costs of £0.6 (2014: £0.1m), restructuring costs of £nil (2014: £1.0m), finance costs of £nil (2014: £8.1m), and non-underlying items included in share of post-tax profits of associates and joint ventures of £1.4m (2014: £1.9m).

Strategy

Stobart aims to create growth in each of its divisions by applying its renowned logistics expertise and first class customer service to:

·    Identify opportunities

·    Grow businesses to create value

·    Realise value for shareholders

Developments in each of the divisions are set out in the following Divisional Review.

Divisional review

Stobart Energy

Stobart Energy is the leading supplier of waste wood biomass fuel in the UK, sourcing and supplying fuel to energy plants under long-term contracts. The Energy division continues to grow and perform well, with both revenue and profitability increasing during the period.

		31 August 2015 £'m	31 August 2014 £'m
Revenue
- Biomass supply		20.9	18.3
- Biomass transport		14.7	14.4
- Total division		35.6	32.7
Divisional underlying EBITDA		4.1	2.8
Tonnes sold (number)		469,000	482,000
Underlying EBITDA per tonne		£8.71	£5.83

In the period, revenue in the Group's Energy division increased by 8.8% in spite of several unplanned closures at two customer plants due to unscheduled maintenance. These have reduced the volumes supplied in the short-term, impacting both the supply and transport businesses. Depending on plant performance and any further unexpected shut downs, we expect to make-up the lost supply tonnage in the second half of the year.

The European migrant crisis impacted on export volumes by road due to the significant standing times of trucks and drivers in the Eurotunnel area.

There have been strong gate fees into UK processing sites along with increased efficiencies at our operating facilities, and good margins have been achieved on export by road sales despite reduced volumes. There has been a good performance on export volumes by ship and we have started the supply to the new Evermore biomass plant at Derry, Northern Ireland ahead of schedule. Initial volumes were sourced locally, with the first volumes supplied from the UK being shipped in June 2015.

Two new long-term fuel supply agreements have been signed in the period:

·    The first agreement is a 12-year index-linked non-exclusive supply agreement to a new 30MW biomass plant at Cramlington, North East England. Under the terms of this agreement we will supply a minimum of 116,000 tonnes per annum of a blend of arboricultural biomass (virgin) and IED exempt clean recycled chips, the equivalent of Grade A waste wood. This will rise to a potential maximum of 141,000 tonnes per annum. The start of operations is scheduled for Q4 in 2017.

·    The second agreement is a 14-year exclusive, index-linked supply agreement to a new 40MW plant at Port Clarence, Teesside, also in North East England. We will supply 250,000 tonnes per annum of Grade C waste wood chips. The start of operations at Port Clarence is scheduled for Q4 in 2017.

A new traffic management and planning system called Mandata went live on 8 June 2015 and the transport business is now fully independent of Eddie Stobart Logistics, following the Group's partial disposal of that business in April 2014. Another development has been the installation of in-cab cameras to encourage safe driving and help accident cost recovery.

The Biomass transport EBITDA has increased year-on-year mainly due to the change from financing vehicles on operating leases to financing by hire purchase.

Outlook

Our target is to supply 2m tonnes of biomass fuel per annum by 2018. Our current customers require approximately 1.2m tonnes per annum and, as previously announced, long-term contracts have been secured to supply over 1.3m additional tonnes per annum from 2018.

Planning permissions for development of both the strategic Pollington processing site and a proposed location in West London are expected to be achieved in the second half of the year. Development of further processing sites at Tilbury and Widnes will commence in 2016. There has been investment in new processing equipment at the Pollington site, resulting in lower average processing costs per tonne. Planning consent has been granted for a 5MW solar development at the same location and we continue to appraise the prospects for development of a solar power facility.

Investment in our people through recruitment and training will meet the growing needs of the business as we gear-up to supply new contracts starting in the next 12 to 24 months.

Stobart Aviation

Stobart Aviation comprises the operations of London Southend Airport, Carlisle Lake District Airport and also Stobart Air in which the Group owns a 45% interest.

		31 August 2015 £'m	31 August 2014 £'m
Revenue		11.9	12.3
Divisional underlying EBITDA		0.4	1.4
Passenger numbers		504,000	628,000
Revenue per passenger		£22.43	£18.69

As previously reported, London Southend Airport and easyJet have worked together to determine the optimum capacity for the routes currently operated from London Southend Airport. As a result of this process, passenger numbers have dipped during the period but load factors and yields for easyJet have improved materially and performance of the easyJet network across 13 existing routes is strong.

The strong performance of easyJet has led to three new routes being announced, with Lanzarote and Lyon starting in November and December 2015 respectively, and Paris in February 2016 with reduced capacity on other routes. Slovenian national carrier Adria Airways also began a three times per week service to Maribor on 1 June 2015. This affirms the potential of the London Southend Airport proposition and its passenger appeal. 

The development of new revenue opportunities, including the opening of a new bar and restaurant, ensured that commercial income streams showed significant improvement once again.  Surface access, shopping and food and beverage revenue per passenger have shown year-on-year increases.

In September 2015, the Aviation division appointed two industry specialists to lead its operations, Glyn Jones (CEO) and Jon Horne (COO). Glyn was previously Managing Director at Luton and Bournemouth airports as well as holding senior roles in other general logistics businesses. Jon was previously Chief Executive at Cardiff International Airport and brings over 40 years of experience in the aviation industry.

Delivering high levels of passenger satisfaction remains a key element of London Southend Airport's offering with speed and ease of use, coupled with high standards of customer service, being reflected in survey results. The airport received three awards from easyJet during the period; for customer service, on time performance and aircraft turnaround efficiency. In addition London Southend was voted best British airport in the Which? customer satisfaction survey for the third year running.

Outlook

Our target is to deliver 2.5m passengers annually by 2018. Our ongoing work to attract more airline business and the feedback we receive demonstrates the growing awareness of the airport and the opportunity to serve demand from London. London's runway capacity remains in short supply, with additional runway capacity in the South East potentially 10 to 15 years away. This brings London Southend's available capacity into increasingly sharp focus.

Consideration is being given to the development of airport assets including runway improvements, and proposed new routes at Carlisle Lake District Airport.  We have been shortlisted for route support on our proposed networks.

Stobart Rail

Stobart Rail is one of the UK's leading names in rail maintenance, repair and improvement, providing services to third party customers, including Network Rail, as well as to Group businesses.

		31 August 2015 £'m	31 August 2014 £'m
Revenue
- External customers		9.0	10.4
- Internal customers		11.9	1.4
- Total		20.9	11.8
Divisional underlying EBITDA		0.9	1.2
Consolidation adjustment		0.3	-
Divisional underlying EBITDA from external customers		1.2	1.2

During the period revenue from external works was slightly lower than the previous year but margins have been held at a healthy level. Internal Group revenue includes the construction of a new air and road distribution centre at Carlisle Lake District Airport.

A £4.1m track lowering scheme from Walsall to Rugeley was completed in the period for Network Rail, as was the Watford Tunnel brick replacement project at a cost of £700,000. Other schemes include the start of work on a £7.2m biomass plant at Widnes for Burmeister & Wain Scandinavian Contractor.

Outlook

Rail infrastructure work is expected to perform well in the second half, supported by a strong order book value of c£61m for external works due to commence over the next 12 months, with revenue and underlying EBITDA expected to improve year-on-year.

Stobart Rail has won the contract for the installation of a £4.7m all-weather track at Newcastle Racecourse, while work is due to get under way on a £1.1m fire station project at London Southend Airport.

The construction of a £2.1m solar farm at London Southend Airport is due to be completed in December 2015, when work is also set to start on a wood processing facility at Tilbury Dock.

Stobart Investments

Our Investments division encompasses our non-controlling interests in Eddie Stobart (logistics) and Propius (aircraft leasing).

		31 August 2015 £'m	31 August 2014 £'m
Share of post-tax profits of associates and joint ventures - underlying
-     Eddie Stobart (logistics)		6.1	3.0
-     Propius (aircraft leasing)		0.3	0.3
		6.4	3.3

The results for Eddie Stobart (logistics) in the period include the profit on disposal of the UK automotive business, which was sold in August 2015, plus other one-off costs. The net benefit of these items totalled £3.2m. The proceeds on disposal contributed to the repayment of borrowings by Eddie Stobart of £21.1m in the period.

The Propius aircraft leasing business continues to operate in line with expectations.

Stobart Infrastructure

Our Infrastructure division complements our four operating divisions. It provides the physical means by which our businesses can operate.

		31 August 2015 £'m	31 August 2014 £'m
Revenue		2.3	2.9
Divisional underlying EBITDA		0.7	2.4
Net cash generated from property disposals		6.2	14.7
		31 August 2015 £'m	28 February 2015 £'m
Airport properties		160.9	160.1
Investment and operational properties		105.9	101.8
Green Energy and other property related investments		14.0	10.6
Infrastructure division assets carrying value		280.8	272.5

There have been a number of developments in the Infrastructure division in the period. The Worcester property was disposed for net proceeds of £6.2m, representing a profit of £0.4m.

An offer has been secured for the Chelford freehold site from a housing developer. In addition, construction work has started on the Widnes biomass site where the full committed amount of £7.5m has been invested.

The purchase of the Pollington site at a cost of £8.4m was completed in March 2015 and we are currently pursuing plans for further developing the part of the site currently used for wood processing by the Group's Energy division. There have been good enquiries in respect of developing the Widnes Mersey Multimodal Gateway site.

Operations started in June this year at the Teesside Anaerobic Digestion plant, in which we hold a 25% equity stake, and it has been operating at close to full capacity. In addition, planning consent was obtained for a 2.5MW solar development at London Southend Airport.

Outlook

Further disposals are expected in the second half of the year. The division expects to continue to realise value through property asset disposals in the short to medium term.

Central costs, eliminations and other

Central costs and eliminations increased to £3.5m (2014: £2.3m) mainly due to the accounting cost of a mark-to-market diesel fuel hedge of £0.9m. This cost is expected to reverse over the remaining life of the instrument.

Finance income of £0.6m (2014: £0.3m) shows increased returns on green energy investments.

Financial review

Tax

The tax credit on continuing operations of £0.5m is at an effective rate lower than the standard rate of 20.1% for the period due to the share of post-tax profits of associates and joint ventures not being taxable.

Balance sheet, debt and gearing

The Group has net assets at the period end of £394.3m (28 February 2015: £406.2m). The reduction is principally due to a dividend payment of £13.1m paid in July 2015. Net assets include property assets and property related investments with a total book value of £280.8m (28 February 2015: £272.5m).

Net debt of £51.9m (28 February 2015: £19.1m) comprising vehicle financing of £29.7m and other debt of £22.2m, giving a gearing ratio (net debt/equity) of 13.2% (28 February 2015: 4.7%). The increase in net debt is set out in the table below:

			£'m
Net debt at 28 February 2015			19.1
Pollington site			9.4
Carlisle distribution centre			8.8
Widnes biomass plant			2.7
Dividends			13.1
Disposal of Worcester property			(6.2)
Net increase in HP related to vehicles			4.0
Others			1.0
Net debt as at 31 August 2015			51.9

In the six month period to 29 February 2016 we do not expect any further significant cash funded capital expenditure and we anticipate further property disposals up to £25.0m in value which will see non-vehicle finance debt reduce.

At 31 August 2015 the committed undrawn headroom in the Lloyds RCF was £19.0m. With cash balances of £8.0m, total headroom was £27.0m.

Brands

In September 2015 the Group welcomed more than 15,000 visitors to 'Stobart Fest' which took place in the new distribution centre at Carlisle Lake District Airport. The book value of the brand at 31 August 2015 was £54.4m.

Dividend

The Board has declared an unchanged interim dividend of 2.0p which will be paid on 4 December 2015 to shareholders on the register as at 6 November 2015.

Key risks and uncertainties

As with any business, risk assessment and the implementation of mitigating actions and controls are vital to successfully achieving the Group's strategy. The Board has overall responsibility for risk management and internal control within the context of achieving the Group's objectives. The key risks are set out in our 2015 Annual Report.

Going concern

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the interim financial statements have been prepared on a going concern basis.

Directors' responsibility statement

We confirm that to the best of our knowledge:

·        The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

·        The interim management report includes a fair review of the information required by:

(a)     DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year

(b)     DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The above statement of directors' responsibilities was approved by the Board on
22 October 2015.

Iain Ferguson                         Andrew Tinkler                      Ben Whawell

Richard Butcher                    Andrew Wood                       John Garbutt             

John Coombs

Stobart Group Limited

 

Condensed Consolidated Income Statement

For the six months ended 31 August 2015

		Unaudited Six months ended 31 August 2015			Unaudited Six months ended 31 August 2014
	Notes	Underlying £'000	Non-underlying £'000	Total £'000	Underlying £'000	Non-underlying £'000	Total £'000
Continuing operations
Revenue	3	57,615	-	57,615	57,648	-	57,648
Operating expenses - Items related to carrying value of investment properties and assets held for sale:
(Loss)/gain in value of investment properties		(326)	-	(326)	652	-	652
Gain/(loss) on disposal of assets held for sale		372	-	372	(68)	-	(68)
Write-down in value of assets held for sale		(275)	-	(275)	-	-	-
Operating expenses - Other		(58,727)	(2,569)	(61,296)	(55,867)	(3,034)	(58,901)
Total operating expenses		(58,956)	(2,569)	(61,525)	(55,283)	(3,034)	(58,317)
Share of post-tax profits/(losses) of associates and joint ventures		6,401	(1,417)	4,984	3,253	(1,893)	1,360
Operating profit/(loss)		5,060	(3,986)	1,074	5,618	(4,927)	691
Finance costs		(1,069)	-	(1,069)	(1,459)	(8,096)	(9,555)
Finance income		601	-	601	258	-	258
Profit/(loss) before tax		4,592	(3,986)	606	4,417	(13,023)	(8,606)
Tax	5	534	-	534	(1,181)	2,229	1,048
Profit/(loss) from continuing operations		5,126	(3,986)	1,140	3,236	(10,794)	(7,558)
Discontinued operation
(Loss)/profit from discontinued operation, net of tax		-	-	-	(2,814)	10,436	7,622
Profit/(loss) for the period		5,126	(3,986)	1,140	422	(358)	64
Earnings per share - continuing
Basic	7	1.58p		0.35p	0.97p		(2.26)p
Diluted	7	1.58p		0.35p	0.97p		(2.26)p
Earnings per share
Basic	7	1.58p		0.35p	0.13p		0.02p
Diluted	7	1.58p		0.35p	0.13p		0.02p

Stobart Group Limited

 

Condensed Consolidated Income Statement

For the six months ended 31 August 2015

		Audited Year ended 28 February 2015
	Notes	Underlying £'000	Non-underlying £'000	Total £'000
Continuing operations
Revenue		116,642	-	116,642
Operating expenses - Items related to carrying value of investment properties and assets held for sale:
Gain in value of investment properties		1,292	-	1,292
Profit on disposal of investment properties		73	-	73
Loss on disposal of assets held for sale		(67)	-	(67)
Operating expenses - Other		(113,648)	(6,403)	(120,051)
Total operating expenses		(112,350)	(6,403)	(118,753)
Share of post-tax profits/(losses) of associates and joint ventures		6,697	(4,190)	2,507
Operating profit/(loss)		10,989	(10,593)	396
Finance costs		(2,356)	(8,090)	(10,446)
Finance income		646	-	646
Profit/(loss) before tax		9,279	(18,683)	(9,404)
Tax	5	(652)	2,045	1,393
Profit/(loss) from continuing operations		8,627	(16,638)	(8,011)
Discontinued operation
(Loss)/profit from discontinued operation, net of tax		(3,713)	10,563	6,850
Profit/(loss) for the period		4,914	(6,075)	(1,161)
Earnings per share - continuing
Basic	7	2.61p		(2.43)p
Diluted	7	2.61p		(2.43)p
Earnings per share
Basic	7	1.49p		(0.35)p
Diluted	7	1.49p		(0.35)p

Stobart Group Limited

 

Condensed Consolidated Statement of Comprehensive Income

As at 31 August 2015

	Six months ended 31 August 2015	Six months ended 31 August 2014	Year ended 28 February 2015
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Profit for the period	1,140	64	(1,161)
Cash flow hedge	-	-	120
Cash flow hedge - items recycled to income statement	-	-	207
Foreign currency translation differences:
Equity accounted joint ventures	60	-	(406)
Equity accounted associates	(227)	-	(610)
Items recycled to income statement	-	-	458
Discontinued operations, net of tax	-	48	48
Pension valuation - equity accounted associates	-	-	(254)
Interest rate swap - equity accounted associates	-	-	(779)
Tax on items relating to components of other comprehensive income	(5)	-	-
Other comprehensive (expense)/income to be reclassified to profit or loss in subsequent periods, net of tax	(172)	48	(1,216)
Re-measurement of defined benefit plan	(331)	(1,153)	(98)
Tax on items relating to components of other comprehensive income	66	231	20
Other comprehensive expense not being reclassified to profit or loss in subsequent periods, net of tax	(265)	(922)	(78)
Other comprehensive expense for the period, net of tax	(437)	(874)	(1,294)
Total comprehensive income/(expense) for the period	703	(810)	(2,455)
Total comprehensive income/(expense) attributable to:
Owners of the Company	703	(810)	(2,455)
Non-controlling interests	-	-	-
Total comprehensive income/(expense) for the period	703	(810)	(2,455)

Stobart Group Limited

 

Condensed Consolidated Statement of Financial Position

As at 31 August 2015

		31 August 2015	28 February 2015
		Unaudited	Audited
	Notes	£'000	£'000
Non-current assets
Property, plant and equipment
- Land and buildings	8	185,217	179,401
- Plant and machinery	8	22,847	23,411
- Fixtures, fittings and equipment	8	943	1,001
- Commercial vehicles	8	20,354	18,102
		229,361	221,915
Investment in associates and joint ventures		62,648	57,828
Investment property		20,600	20,926
Intangible assets		114,265	116,234
Other receivables		13,604	10,828
		440,478	427,731
Current assets
Inventories		47,466	46,152
Trade and other receivables		43,406	42,421
Cash and cash equivalents	9	8,025	5,716
Assets of disposal groups classified as held for sale		6,652	7,375
		105,549	101,664
Total assets		546,027	529,395
Non-current liabilities
Loans and borrowings	9	(52,710)	(17,497)
Defined benefit pension scheme		(2,563)	(2,332)
Other liabilities		(22,060)	(24,903)
Deferred tax		(19,768)	(20,362)
Provisions		(6,023)	(5,720)
		(103,124)	(70,814)
Current liabilities
Trade and other payables		(37,409)	(43,853)
Loans and borrowings	9	(7,251)	(7,282)
Corporation tax		(3,959)	(713)
Provisions		-	(485)
		(48,619)	(52,333)
Total liabilities		(151,743)	(123,147)
Net assets		394,284	406,248

Stobart Group Limited

 

Condensed Consolidated Statement of Financial Position

As at 31 August 2015

	31 August 2015	28 February 2015
	Unaudited	Audited
	£'000	£'000
Capital and reserves
Issued share capital	35,434	35,434
Share premium	301,326	301,326
Foreign currency exchange reserve	(1,183)	(1,016)
Reserve for own shares held by employee benefit trust	(330)	(330)
Retained earnings	59,037	70,834
Total Equity	394,284	406,248

Stobart Group Limited

 

Condensed Consolidated Statement of Changes in Equity

For the six months ended 31 August 2015

For the six months ended 31 August 2015

Unaudited

	Issued share capital	Share premium	Foreign currency exchange reserve	Reserve for own shares held by EBT	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 March 2015	35,434	301,326	(1,016)	(330)	70,834	406,248
Profit for the period	-	-	-	-	1,140	1,140
Other comprehensive expense for the period	-	-	(167)	-	(270)	(437)
Total comprehensive income for the period	-	-	(167)	-	870	703
Share-based payment credit	-	-	-	-	450	450
Dividends	-	-	-	-	(13,117)	(13,117)
Balance at 31 August 2015	35,434	301,326	(1,183)	(330)	59,037	394,284

For the six months ended 31 August 2014

Unaudited

	Issued share capital	Share premium	Foreign currency exchange reserve	Reserve for own shares held by EBT	Hedge reserve	Retained earnings	Total equity	Non-controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 March 2014	35,434	301,326	(506)	(408)	(327)	125,606	461,125	13	461,138
Profit for the period	-	-	-	-	-	64	64	-	64
Other comprehensive income/(expense) for the period	-	-	48	-	-	(922)	(874)	-	(874)
Total comprehensive income/(expense) for the period	-	-	48	-	-	(858)	(810)	-	(810)
Employee benefit trust shares granted	-	-	-	79	-	-	79	-	79
Items recycled to income statement	-	-	458	-	327	-	785	-	785
Share-based payment credit	-	-	-	-	-	1,566	1,566	-	1,566
Tax on share-based payment credit	-	-	-	-	-	(1)	(1)	-	(1)
Purchase of treasury shares	-	-	-	-	-	(34,764)	(34,764)	-	(34,764)
Disposal of minority interest	-	-	-	-	-	-	-	(13)	(13)
Dividends	-	-	-	-	-	(13,242)	(13,242)	-	(13,242)
Balance at 31 August 2014	35,434	301,326	-	(329)	-	78,307	414,738	-	414,738

Stobart Group Limited

 

Condensed Consolidated Statement of Changes in Equity

For the six months ended 31 August 2015

For the year to 28 February 2015

Audited

	Issued share capital	Share premium	Foreign currency exchange reserve	Reserve for own shares held by EBT	Hedge reserve	Retained earnings	Total equity	Non-controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 March 2014	35,434	301,326	(506)	(408)	(327)	125,606	461,125	13	461,138
Loss for the year	-	-	-	-	-	(1,161)	(1,161)	-	(1,161)
Other comprehensive (expense)/income for the year	-	-	(510)	-	327	(1,111)	(1,294)	-	(1,294)
Total comprehensive (expense)/income for the year	-	-	(510)	-	327	(2,272)	(2,455)	-	(2,455)
Employee benefit trust shares granted	-	-	-	78	-	-	78	-	78
Share-based payment credit	-	-	-	-	-	1,966	1,966	-	1,966
Tax on share-based payment	-	-	-	-	-	106	106	-	106
Purchase of treasury shares	-	-	-	-	-	(34,764)	(34,764)	-	(34,764)
Disposal of minority interest	-	-	-	-	-	-	-	(13)	(13)
Dividends	-	-	-	-	-	(19,808)	(19,808)	-	(19,808)
Balance at 28 February 2015	35,434	301,326	(1,016)	(330)	-	70,834	406,248	-	406,248

Stobart Group Limited

 

Condensed Consolidated Statement of Cash Flows

For the six months ended 31 August 2015

		Six months ended 31 August 2015	Six months ended 31 August 2014	Year ended 28 February 2015
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Cash generated from/(used in) continuing  operations	11	2,323	(590)	5,832
Cash outflow from discontinued operations		-	(17,227)	(16,669)
Income taxes received/(paid)		3,246	(10)	(10)
Net cash flow from operating activities		5,569	(17,827)	(10,847)
Purchase of property, plant and equipment and investment property		(24,895)	(11,944)	(10,145)
Proceeds from grants		-	457	607
Proceeds from the sale of property, plant and equipment and investment property		5,579	267	15,660
Proceeds from disposal of assets held for sale		6,172	12,830	12,830
Proceeds from disposal of subsidiary undertaking (net of fees)		-	176,191	175,894
Proceeds from issue of licence premium		-	13,700	13,700
Equity investment in joint ventures		-	-	(1,439)
Distributions from joint ventures		-	-	2,874
Net amounts advanced to associates and joint ventures		(2,714)	(38)	(10,444)
Other loans advanced		(300)	-	(300)
Interest received		26	258	549
Cash inflow from discontinued operations		-	-	349
Net cash flow from investing activities		(16,132)	191,721	200,135
Dividend paid on ordinary shares		(13,117)	(13,242)	(19,808)
Repayment of capital element of finance leases		(4,025)	(1,215)	(4,939)
Proceeds from new borrowings		-	5,000	14,332
Repayment of borrowings		-	(126,431)	(143,589)
Net drawdown from revolving credit facility		30,812	-	-
Purchase of treasury shares, net of costs		-	(34,764)	(34,764)
Interest paid		(798)	(1,325)	(2,105)
Interest paid - non-underlying		-	(1,043)	(1,278)
Cash outflow from discontinued operations		-	-	(907)
Net cash flow from financing activities		12,872	(173,020)	(193,058)

Stobart Group Limited

 

Condensed Consolidated Statement of Cash Flows

For the six months ended 31 August 2015

		Six months ended 31 August 2015	Six months ended 31 August 2014	Year ended 28 February 2015
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Increase/(decrease) in cash and cash equivalents		2,309	874	(3,770)
Cash and cash equivalents at beginning of period		5,716	9,486	9,486
Cash and cash equivalents at end of period		8,025	10,360	5,716
Restricted cash movements
Cash and cash equivalents at beginning of period		-	68,130	68,130
Repayment of borrowings		-	(64,130)	(64,130)
Interest paid - non-underlying		-	(4,000)	(4,000)
Decrease in cash and cash equivalents		-	(68,130)	(68,130)
Restricted cash at end of period		-	-	-
Total cash and cash equivalents at end of period, including restricted cash		8,025	10,360	5,716

1      Accounting policies of Stobart Group Limited

Corporate information

The condensed consolidated financial statements of the Group for the six months ended 31 August 2015 were authorised for issue in accordance with a resolution of the directors on 22 October 2015.

Stobart Group Limited is a Guernsey registered company whose ordinary shares are publicly traded on the London Stock Exchange.

The principal activities of the Group are described in note 3.

Basis of preparation

The condensed consolidated financial statements of the Group for the six months ended 31 August 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

The condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 28 February 2015. Except for the 28 February 2015 comparatives, the financial information set out herein is unaudited but has been reviewed by the auditors, KPMG LLP, and their report to the Company is attached.

The comparative financial information set out in these interim consolidated financial statements does not constitute the Group's statutory accounts for the year ended 28 February 2015 but has been derived from the accounts. Statutory accounts for the period ended 28 February 2015 have been published and KPMG LLP has reported on those accounts. Their audit report was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report. The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.

Going concern

The Group has considerable financial resources, together with contracts with a number of customers and suppliers. The financial forecasts show that borrowing facilities are adequate such that the Group can operate within these facilities and meet its obligations when they fall due for the foreseeable future. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

Significant accounting policies

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 28 February 2015. These accounting policies are expected to be applied for the full year to 28 February 2016.

The following new standards and amendments to existing standards have been published and are mandatory for accounting periods beginning on or after 1 January 2016:

Standard, amendment and interpretation	Effective for accounting periods commencing on or after
IFRS 9 - Financial instruments	1 January 2018
IFRS 15 - Revenue from contracts with customers	1 January 2018
The Group is currently assessing the potential impact of these new standards and has not applied them early.  A number of standards have been modified on miscellaneous points. None of these amendments are expected to have a material effect on the Group's Financial Statements.

2      Seasonality of operations

There is no significant seasonal effect on revenues and profits between the first and second six months of the financial year for the Group as a whole. The higher seasonal sales in summer in Stobart Aviation are expected to be approximately balanced by the higher seasonal sales in winter in Stobart Energy.

3      Segmental information

The reporting segments within continuing operations are Stobart Energy, Stobart Aviation, Stobart Rail, Stobart Investments and Stobart Infrastructure.

The Stobart Energy segment specialises in supply of sustainable biomass for the generation of renewable energy.

The Stobart Aviation segment specialises in operation of commercial airports and includes a joint venture investment in an airline.

The Stobart Rail segment specialises in delivering internal and external civil engineering development projects including rail network operations.

The Stobart Investments segment holds non-controlling interests in a transport & distribution business and an aircraft leasing business.

The Stobart Infrastructure segment specialises in management, development and realisation of Group land and buildings assets as well as investments in energy plants.

The Executive Directors are regarded as the Chief Operating Decision Maker (CODM).  The Directors monitor the results of each business unit separately for the purposes of making decisions about resource allocation and performance assessment. The main segmental profit measure is earnings before interest, tax, depreciation, amortisation and internal rent and is shown before non-underlying items.

Income taxes, finance costs and certain central costs are managed on a group basis and are not allocated to operating segments.

Period ended 31 August 2015	Energy	Aviation	Rail	Investments	Infrastructure	Adjustments and eliminations	Group
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue
External	32,167	11,895	9,000	-	2,056	2,497	57,615
Internal	3,385	-	11,895	-	212	(15,492)	-
Total revenue	35,552	11,895	20,895	-	2,268	(12,995)	57,615
Segment EBITDA before internal rent	4,086	366	945	6,401	735	(3,526)	9,007
Internal rent charge	-	(357)	-	-	357	-	-
Segment EBITDA after internal rent	4,086	9	945	6,401	1,092	(3,526)	9,007
Segment PBT	2,838	(576)	206	6,401	36	(4,313)	4,592
New business and new contract set up costs							(600)
Amortisation of acquired intangibles							(1,969)
Non-underlying items included in share of post-tax profits of associates and joint ventures							(1,417)
Profit before tax							606

Inter-segment revenues are eliminated on consolidation.

Included in adjustments and eliminations are central costs of £4,642,000 (2014: £3,061,000) and intragroup loss of £329,000 (2014: £19,000). Central costs include £864,000 (2014: £nil) relating to the diesel fuel hedge. This cost is expected to reverse over the remaining life of the instrument.

Period ended 31 August 2014	Energy	Aviation	Rail	Investments	Infrastructure	Adjustments and eliminations	Group
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue
External	29,490	12,271	10,362	-	2,697	2,828	57,648
Internal	3,196	-	1,459	-	167	(4,822)	-
Total revenue	32,686	12,271	11,821	-	2,864	(1,994)	57,648
Segment EBITDA before internal rent	2,812	1,394	1,223	3,253	2,380	(2,317)	8,745
Internal rent charge	-	(713)	-	-	713	-	-
Segment EBITDA after internal rent	2,812	681	1,223	3,253	3,093	(2,317)	8,745
Segment PBT	2,640	77	432	3,253	1,057	(3,042)	4,417
New business and new contract set up costs							(113)
Restructuring costs							(952)
Amortisation of acquired intangibles							(1,969)
Non-underlying finance costs							(8,096)
Non-underlying items included in share of post-tax profits of associates and joint ventures							(1,893)
Profit before tax							(8,606)

4      Non-underlying items

Non-underlying items included in the consolidated income statement comprise the items set out and described below.

		Six months ended 31 August 2015	Six months ended 31 August 2014	Year ended 28 February 2015
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Operating expenses - other:
-     New business and new contract set up costs		600	113	779
-     Restructuring costs		-	952	1,685
-     Amortisation of acquired intangibles		1,969	1,969	3,939
		2,569	3,034	6,403
Share of post-tax profits of associates and joint ventures:
-     Transaction costs		-	700	704
-     Restructuring costs		-	-	886
-     Amortisation of acquired intangibles		1,417	1,193	2,600
		1,417	1,893	4,190

New business and new contract set up costs comprise costs of investing in major new business areas or major new contracts to commence or accelerate development of our business presence. These costs include marketing costs, establishment costs, legal and professional fees, losses and certain staff and training costs. The costs in the current period were in relation to the development of business at London Southend Airport.

Transaction costs comprise costs of making investments or costs of financing transactions that are not permitted to be debited to the cost of investment or as issue costs. These costs include costs of any aborted transactions.

Restructuring costs comprise costs of integration plans and other business reorganisation and restructuring undertaken by management. Costs include cost rationalisation, brand harmonisation, site closure costs, certain short term duplicated costs, asset write downs and other costs related to the reorganisation and integration of businesses. These are principally expected to be one off in nature.

Amortisation of acquired intangibles comprises the amortisation of intangible assets identified as fair value adjustments in acquisition accounting.

Non-underlying finance costs comprise the costs associated with early repayment of debt balances. Costs include repayment fees, associated issue costs written off and directly related professional fees.

Non-underlying items included in the share of post-tax profits of associates and joint ventures all relate to the investment in Greenwhitestar Holding Company 1 Limited.

5      Taxation

Taxation on profit on ordinary activities

Total tax charged in the income statement from continuing and discontinued operations	Six months ended 31 August 2015	Six months ended 31 August 2014	Year ended 28 February 2015
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Current income tax:
UK Corporation tax
-     Continuing operations	-	-	-
-     Discontinued operations	-	443	443
Overseas tax	-	-	-
Adjustment in respect of prior years	-	745	890
Total current tax	-	1,188	1,333
Deferred tax:
Origination and reversal of temporary differences	(527)	(1,793)	(1,916)
Impact of change in rate	-	-	-
Adjustment in respect of prior years	(7)	-	32
Total deferred tax	(534)	(1,793)	(1,884)
Total credit in the income statement from continuing and discontinued operations	(534)	(605)	(551)

Included in the above tax credit for the current period is a total current tax charge on continuing operations of £nil (2014: £745,000), total deferred tax credit on continuing operations of £534,000 (2014: £1,793,000) and total tax credit on continuing operations in the income statement of £534,000 (2014: £1,048,000).

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and from 19 to 18% (effective from 1 April 2020) were announced in the Summer Budget 2015. These reductions have yet to be substantively enacted in legislation. These reductions will reduce the Group's future current tax charge accordingly. The deferred tax liability at 31 August 2015 has been calculated based on the rate of 20% substantively enacted at the balance sheet date.

6      Dividends

A final dividend of 4.0p per share (2014: 4.0p) totalling £13,117,033 (2014: £13,249,153 paid on 4 July 2014) was declared on 14 May 2015 and was paid on 3 July 2015.

An interim dividend of 2.0p (2014: 2.0p) per share totalling £6,558,517 (2014: £6,558,517 paid on 6 December 2013) was declared on 22 October 2015 and will be paid on 4 December 2015. This is not recognised as a liability at 31 August 2015.

7      Earnings per share

The following table reflects the income and share data used in the basic and diluted earnings per share calculations:

		Six months ended 31 August 2015	Six months ended 31 August 2014	Year ended 28 February 2015
		Unaudited	Unaudited	Audited
Numerator		£'000	£'000	£'000
Continuing operations
Profit/(loss) used for basic and diluted earnings		1,140	(7,558)	(8,011)
Discontinued operations
Profit used for basic and diluted earnings		-	7,622	6,850
Total
Profit/(loss) used for basic and diluted earnings		1,140	64	(1,161)
Denominator		Number	Number	Number
Weighted average number of shares used in basic EPS		324,752,939	335,065,885	329,929,986
Effects of employee share options		-	-	-
Weighted average number of shares used in diluted EPS		324,752,939	335,065,885	329,929,986
Own shares held and therefore excluded from weighted average number		29,575,892	29,700,053	29,700,053

The numerator used for the basic and diluted underlying earnings per share for continuing operations is the underlying profit from continuing operations of £5,126,000 (2014: £3,236,000). The numerator used for the basic and diluted underlying earnings per share is the underlying profit for the period of £5,126,000 (2014: £422,000).

8      Property, plant and equipment

Additions and disposals

During the six months ended 31 August 2015, the Group acquired or developed property, plant and equipment assets with a cost of £23,427,000 (2014: £12,950,000). This included the development of a distribution centre at Carlisle Lake District Airport, the purchase of a site in Pollington and additional trucks and trailers.

Property, plant and equipment assets with a book value of £5,579,000 (2014: £211,000) were disposed of by the Group during the six months ended 31 August 2015 resulting in a profit of £nil (2014: £56,000).

Capital commitments

At 31 August 2015, the Group had capital commitments of £588,000 (2014: £379,000) principally relating to equipment in the Rail division and development at London Southend Airport.

9      Analysis of net debt

		31 August 2015	28 February 2015
		Unaudited	Audited
		£'000	£'000
Loans and borrowings
Non-current
Fixed rate:
- Obligations under finance leases and hire purchase contracts		5,707	6,045
Variable rate:
- Obligations under finances leases and hire purchase contracts		16,732	11,452
- Bank loans		30,271	-
		52,710	17,497
Current
Fixed rate:
- Obligations under finance leases and hire purchase contracts		2,766	2,559
Variable rate:
- Obligations under finances leases and hire purchase contracts		4,485	4,723
		7,251	7,282
Total loans and borrowings		59,961	24,779
Cash		8,025	5,716
Net debt		51,936	19,063

Bank loans relate to a variable rate revolving credit limit facility provided by Lloyds of £50.0m, offset by the related debt issue costs, with £31.0m drawn down at the period end. This facility has an end date of January 2019. The facility is secured against group properties at London Southend Airport, Carlisle Airport, Widnes and Runcorn.

10    Fair values

Financial Assets and Liabilities

The book value and fair values of financial assets and financial liabilities are as follows:

		Book Value 31 August 2015	Fair Value 31 August 2015
		Unaudited	Unaudited
		£'000	£'000
Financial Assets
Cash		8,025	8,025
Amounts owed by associates and joint ventures		13,604	13,604
Trade receivables		16,647	16,647
Other receivables		600	600
Financial Liabilities
Trade payables		17,065	17,065
Loans and borrowings		30,271	30,271
Finance leases and hire purchase arrangements		29,690	29,690
Diesel swap		748	748

		Book Value 28 February 2015	Fair Value 28 February 2015
		Audited	Audited
		£'000	£'000
Financial Assets
Cash		5,716	5,716
Amounts owed by associates and joint ventures		10,344	10,344
Trade receivables		17,493	17,493
Other receivables		945	945
Diesel swap		116	116
Financial Liabilities
Trade payables		16,660	16,660
Finance leases and hire purchase arrangements		24,779	22,158
Other payables		253	253

For trade and other receivables/payables with a remaining life of less than one year, the carrying amount is considered to reflect the fair value.

The fair values of loans and borrowings have been calculated by discounting the expected future cash flows at prevailing interest rates.

Fair Value Hierarchy

The fair value hierarchy is explained in the Annual Report.

Liabilities measured at Fair Value as at 31 August 2015
	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Diesel swap	748	-	748	-
Assets measured at Fair Value as at 28 February 2015
	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Diesel swap	116	-	116	-

During the six months ended 31 August 2015, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

11    Cash generated from operations

	Six months ended 31 August 2015	Six months ended 31 August 2014	Year to 28 February 2015
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Profit/(loss) before tax from continuing operations	606	(8,606)	(9,404)
Adjustments to reconcile profit/(loss) before tax to net cash flows:
Non-cash:
Loss/(gain) in value of investment properties	326	(652)	(1,292)
Realised profit on sale of property, plant and equipment and investment properties	-	(56)	(305)
Share of post-tax profits of associates and joint ventures accounted for using the equity method	(4,984)	(1,360)	(2,507)
(Profit)/loss on disposal of/loss in value of assets held for sale	(97)	68	67
Depreciation of property, plant and equipment	3,947	3,127	6,751
Finance income	(601)	(258)	(646)
Finance cost	1,069	1,459	2,356
Finance costs - non-underlying	-	8,096	8,090
Release of grant income	(151)	(131)	(277)
Amortisation of intangibles	1,969	1,969	3,939
Share option charge	450	250	523
Working capital adjustments:
Increase in inventories	(210)	(239)	(94)
Increase in trade and other receivables	(547)	(20,047)	(14,493)
Increase in trade and other payables	546	15,790	13,124
Cash generated from/(used in) continuing operations	2,323	(590)	5,832

12        Related parties

Associates and joint ventures

Since the partial disposal of the transport and distribution division, there have been a number of transactions with the group headed by Greenwhitestar Holding Company 1 Limited, an associate interest. During the period, the Group made sales of £7,497,000, mainly relating to cost recharges, (see below) and purchases of £2,314,000, mainly relating to haulage costs and cost recharges (see below).

The Group and members of the group headed by Greenwhitestar Holding Company 1 Limited operated under a transitional services agreement for a period following the partial disposal which expired in the period ending August 2015. This agreement detailed recharges for shared services; significant examples are time apportioned staff costs, truck and trailer hire costs, property leases,  office space rental charges, fuel and car costs, IT hardware and software costs and payroll processing costs.

During the period to 31 August 2015 the Group made loans to its associate interest, Mersey Bioenergy Holdings Limited, of £2,695,000.

During the period to 31 August 2015 the Group made additional loans to its associate interest, Shuban Power Limited, of £16,000.

INDEPENDENT REVIEW REPORT TO STOBART GROUP LIMITED

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 August 2015 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Cash Flow Statement and the related explanatory notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in note 1, the financial statements of the group are prepared in accordance with IFRSs as adopted by the EU.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 August 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Nicola Quayle

for and on behalf of KPMG LLP

Chartered Accountants

1 St Peter's Square, Manchester, M2 3AE

22 October 2015

 

END

 

 

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