Results for the year ended 29 February 2020
Warwick BradyChief Executive Officer
“We are today announcing a clear plan to stabilise the business and provide a secure platform to move forward. We have a cost-efficient proposition for airlines and will further develop our passenger-focused airport experience that seeks to maintain passenger flow and provide enhanced customer confidence. Therefore, we will focus our investment and our business in this asset by seeking to dispose of our non-core businesses and, in due course, monetise Stobart Energy.
“The launch of the capital raise that we have announced today will provide the Group with the financial resilience necessary in the current environment and ultimately to position the business for success in the post COVID environment.”
Overview of the year under review
- The business continued to make positive progress at an operating level in its core businesses. Passenger numbers at London Southend Airport were up by 43.1% to 2.1m and waste wood tonnage supplied by our Energy from Waste business was up by 11.5% to 1.5m tonnes. As a result, combined underlying EBITDA from our two main operating divisions increased by 36% to £32.8m.
- During the year, all amounts receivable from Connect Airways were impaired to nil. Post year end, Connect Airways and its subsidiary Flybe entered administration after the proposed rescue finance package for Flybe was impacted by the emerging COVID-19 crisis. The equity accounted losses and the impairment of receivables totalled £54.2m.
- Further non-cash costs included £56.8m of impairments, depreciation (£22.7m), brand amortisation (£7.5m) and equity accounted losses (£9.8m). Significant cash items included new business and contract set-up costs of £19.1m, including £9.3m of new business and contract set-up costs associated with London Southend Airport. This resulted in a loss for the year of £137.9m.
Actions taken to respond to the COVID-19 crisis
- Current trading has been severely impacted as a result of the COVID-19 pandemic. In March, the Board moved swiftly to preserve liquidity, implementing a freeze on all discretionary expenditure and recruitment, placed over 50% of employees on furlough and reduced the pay of the Board and Senior Leadership team;
- In order to stabilise the Group’s financial position while maintaining its operational capability through the current crisis period, the Group has today announced its intention to raise in excess of £120m through a combination of additional bank facilities of £40m and new equity in excess of £80m; and
- Recognising the changes in the economic and social environment as a result of the COVID-19 pandemic, the Board has agreed a focused strategy to deliver shareholder value in the new environment. The basis of this strategy is to:
- Focus on Aviation. At London Southend Airport we will specifically design and implement an improved passenger experience for post-COVID 19 travel, making use of significant unutilised space and technology to enhance passenger confidence, while providing a cost-efficient base of operation to airlines;
- Realise value from the Energy business as a maturing, cash generative and stable business. This business is starting to benefit from a restart in the construction sector and is likely to be attractive to strategic partners and infrastructure investors and we will look to monetise value for shareholders over the next 18 to 24 months;
- Withdraw from the Rail & Civils business during the course of FY21. This business was impacted by continuing costs on a legacy contract and is unlikely to generate an appropriate return for shareholders given the risks associated to it; and
- All other non-core businesses or assets will be realised for value over the next three years.
Results for the 12 months ended 29 February 2020
|Divisional Revenue Summary||29 February 2020|
|28 February 2019|
|Revenue from two main operating divisions||133.1||104.5|
|Rail & Civils||41.5||52.3|
|Central costs and eliminations||(9.3)||(14.8)|
|Divisional Continuing Profit Summary||29 February 2020|
|28 February 2019|
|Underlying EBITDA from two main operating divisions1||32.8||24.1|
|Rails & Civils||(7.1)||(4.8)|
|Central costs and eliminations||(7.6)||(7.9)|
|Underlying EBITDA 1||16.0||10.8|
|Impact of swaps||(0.3)||(0.4)|
|Impairment of loan notes||(2.8)||(3.2)|
|Finance costs (net)||(9.7)||(4.2)|
|Loss for the period||(149.6)||(42.6)|
1 Underlying EBITDA represents loss before interest, tax, depreciation, amortisation, swaps and non-underlying items.