Robust Performance across the Group Despite Tough Market for Transport

Stobart Group (Stobart), a leading provider of multi-modal transport logistics, Estates, Air and Biomass, today announces its interim results for the six months ended 31 August 2011.

Financial Highlights

Revenue up 15.3% to £281.1m (2010: £243.7m)

Underlying EBITDA* up 2.6% to £27.6m (2010: £26.9m)

Underlying profit before tax** up 6.5% to £16.4m (2010: £15.4m)

Profit before tax of £14.7m (2010: £15.4m)

Adjusted earnings per share*** of 3.9p (2010: 4.3p)

Interim dividend of 2.0p (2010: 2.0p) per share payable on 9 December 2011

Net cash generated from operations up 104% to £27.8m (2010: £13.6m)

*Underlying EBITDA is calculated as the underlying operating profit of £19.1m (2010: £18.8m) adding back depreciation and amortisation of £8.7m (2010: £8.6m) and less share based payments of £0.2m (2010: £0.5m).
** Underlying profit before tax comprising the underlying EBITDA of £27.6m (2010: £26.9m) less depreciation and amortisation of £8.7m (2010: £8.6m) less finance costs of £3.3m (2010: £3.3m) plus finance income of £0.8m (2010: £0.4m).
***EPS based on underlying PBT and allowing for a 26.2% tax charge.

Operational Highlights

• New operating divisional business structure implemented;
• In May the Placing and open offer raised around £114m net. At that time we announced the acquisition of the remaining half of the Biomass business and the intention to invest in developing the property portfolio;

Transport and Distribution

• Actions taken in response to a difficult market in the first half have focussed on better fleet utilisation and greater operating efficiencies. This has resulted in more recent months in a significant improvement in margins and restoration to a profit run rate more broadly in line with our initial expectations, despite the continuing weak economic background;
• These new information technology systems have also enabled us to further analyse our cost base and compare the operating efficiency of each division in our new structure. This will drive further efficiencies, consolidation and removal of waste moving forward;
• New and renewed business with Coca Cola, P&G, Tesco and Mercedes & Pirelli F1;

Estates

• Property asset values have increased in our new Estates division and a number of potential property deals in the pipeline as outlined at the Placing in May are still under review. Moving forward if undertaken they would provide an enhanced return on capital and add value. Discussions to acquire the Westbury portfolio continue. If agreement is reached to buy the portfolio, the acquisition will be submitted for shareholder approval;
• The gain in value of £3.5m (2010: nil) on One Plantation Place, a property asset held for sale, in our Estates division has been presented within underlying operating profit as a result of our divisional reorganisation. The gain relates to a reversal of a past impairment that was in discontinued operations in 2009. A comparative gain in the prior full year of £2.1m was presented below underlying operating profit but included in our headline underlying profits. This gain has been restated in the current year to be consistent;
• We have established a new property operating board chaired by Paul Orchard-Lisle;

Biomass

• The Biomass business is expanding quickly and already exports from 6 ports;

Air

• Several milestones reached in development of London Southend Airport:

- A new ten year partnership with easyJet commencing in April 2012 with, initially, three aircraft stationed at London Southend Airport offering seventy departures per week to nine European destinations;

- Our airport railway station, which we operate, commenced service in July with up to eight trains an hour to Stratford and Liverpool Street;

- Airport access road constructed by Stobart Rail opened on 1 September with new terminal and hotel developments well underway;

- Planning has been confirmed for the runway extension which should be completed in early 2012 in advance of the London Olympics;

• The Group has reduced non fleet-related net borrowing to £38.6m (28 February 2011: £111.1m) providing greater financial strength and flexibility.

Andrew Tinkler, Chief Executive Officer, said:

“We have delivered a robust performance across the Group despite a tough market for transport. Our new strategy is being implemented and we are well positioned to deliver strong results in the medium term.

“The weak economy, however, has held back our rate of profit growth particularly in Transport and Distribution.

“The road transport operations were affected by fluctuating customer demand during the summer, but we have substantially improved our operational information systems allowing us to manage this volatility much better and achieve cost savings. This has meant that the division is back on track and profitability has broadly returned to previous expected levels.

“Estates is on track to deliver future value and has a number of potential property transactions in the pipeline.

“Our Biomass business is expanding quickly as a result of demand from both the UK and overseas and we expect plenty of new opportunities to arise from the fast-growing renewable energy sector.

“We have made great progress at London Southend Airport. The work is on target and we anticipate passenger numbers to grow strongly once easyJet flights begin next spring in advance of the Olympic Games.

“As a result of the actions we have taken in Transport and Distribution we expect to report further progress in the second half. The Board’s outlook for the year is broadly unchanged despite the tough environment”.