TIDMSTOB
RNS Number : 1956B
Stobart Group Limited
22 October 2009
Stobart Group Limited
Interim Results for the six months ended 31 August 2009
Stobart Group (Stobart) is one of the UK's leading providers of multimodal
transport and logistics solutions offering road, rail, sea and air transport.
The Group also provides warehousing, storage and handling facilities.
Financial Highlights
* Revenue from continuing operations of GBP218.2m (2008: GBP199.2m)
* Earnings after fleet financing costs (EAFFC) of GBP13.5m* (2008: GBP13.4m)
* Profit before tax and restructuring costs of GBP12.4m (2008: GBP11.0m)
* Earnings per share from continuing operations (normalised before restructuring
costs and allowing for a 28% tax charge) totalling 3.7p (2008 like for like
basis: 3.7p)
* Interim dividend of 2p per share
* Net cash generated from operations of GBP19.7m (2008: GBP11.0m)
Operational Highlights
* Announcement of the launch of a new temperature-controlled intermodal service
from Valencia to the UK in partnership with DB Schenker
* Completion of integration of James Irlam fleet business in to Eddie Stobart
* Announcement of a new GBP25m per annum contract for Tesco non-food at Teesport
* Restructuring of the chilled operation bringing this division to profitability
* Opening of a refurbished warehousing facility in Bardon, Leicestershire
contracted with Nestlé UK Ltd and worth approximately GBP11m per annum
* Completion of 528,000 sq. ft. chilled distribution centre Phase 1 development at
the inland port at Widnes by Stobart Rail
* Acquisition of Carlisle Lake District airport for GBP10.1m on 30 May 2009
* London Southend Airport has agreed commercial terms with DfT for development of
the railway station
* EAFFC comprises the underlying operating profit of GBP15.8m (2008: GBP15.2m)
less share based payments of GBP0.4m (2008: GBP0.4m) less the fleet financing
costs of GBP1.9m (2008: GBP1.4m.)
Stobart Group will be holding a presentation for analysts at 09:30hrs today (22
October) at Charlotte Street Hotel, 15-17 Charlotte Street, London, W1T 1RJ. If
you would like to attend, please contact Samantha Echeverria on
Samantha.Echeverria@collegehill.com or 020 7457 2074.
Andrew Tinkler, Chief Executive, comments:
"Our half-year results demonstrate stability and performance against a
background of economic recession. Volumes are strengthening with new contracts
recently signed with Tesco, Nestlé and the launch of new rail services such as
the distribution from Valencia to the UK of temperature-controlled fresh
produce. We also announce today a further contract award from Tesco in Donabate,
Ireland. The civil engineering business continues to win new contracts and add
value on the Group's capital projects at the two airports and the Widnes inland
port.
We expect a strong performance in the second half focusing on organic growth via
new business wins and action already taken to reduce costs with the completion
of the integration of Eddie Stobart and James Irlam. The Group is offering a
full circle of service provision to customers who are increasingly looking to
exit inflexible fixed price contracts and work in mutual partnership to deliver
efficient, green multimodal logistics solutions."
22 October 2009
ENQUIRIES:
+--------------------------------------+---------------------------------+
| Stobart Group | Tel: 01925 605400 |
| Andrew Tinkler, Chief Executive | |
| Officer | |
| Ben Whawell, Chief Financial Officer | |
| | |
+--------------------------------------+---------------------------------+
| College Hill | Tel: 020 7457 2020 |
| Mark Garraway | |
| Gareth David | |
| | |
+--------------------------------------+---------------------------------+
CHAIRMAN'S Statement
Overview
I am delighted to be able to report on a period of further progress and
consolidation for the Group.
We have successfully integrated the James Irlam business in to our Eddie Stobart
Division and partly integrated the chilled business. This should produce
operational synergies for the second half.
We have continued to develop our multimodal strategy through acquisition of
Carlisle Lake District airport and major developments in the ports and rail
divisions. Andrew Tinkler, in his Chief Executive's review, sets out the
strategy in more detail and how it will deliver significant value to the Group
over the coming years.
Results
Total revenue for the period from continuing operations was GBP218.2m (2008:
GBP199.2m), producing earnings after fleet financing costs (EAFFC) of GBP13.5m
(2008: GBP13.4m) and normalised profit before taxation and restructuring costs
of GBP12.4m (2008: GBP11.0m). Statutory profit before tax was GBP11.1m (2008:
GBP11.0m). Earnings per share from continuing operations (normalised before
restructuring costs and allowing for a 28% tax charge) totalled 3.7p (2008:
3.7p).
Dividend
The Board has declared an interim dividend of 2.0p, which will be paid on 10
December 2009 to shareholders on the register as at 30 October 2009. This
reflects an expected one third to two thirds payment profile consistent with
prior years and the current expectation for the future.
People
On 9 July 2009, Jesper Kjedegaard and Daniel Dayan were appointed as
Non-Executive Directors. We are delighted to welcome two very strong and
talented individuals to our Board who have the necessary skills and experience
to help guide the Group through this exciting time in its development.
Jesper brings a wealth of experience in multi-modal logistics, specifically in
the ports and shipping sector. This will add strong insights, particularly
around the Group's ports and feeder service developments. Daniel has very solid
operational and listed company experience and has been directly involved in the
procurement of logistics services. This experience gives him a strong customer
perspective.
Outlook
We expect that the new business wins and recently announced contracts
will deliver strong growth in performance in the second half of the financial
year. We will also continue to review our ongoing cost base and to identify
operational efficiencies. This, along with the breadth and quality of our
service offering will, we believe, enable us to continue to grow the Group's
revenue and profitability.
The Board looks forward to reporting on further progress, including a strong
second half, giving a result for the year as a whole that will be in line with
our expectations.
RODNEY BAKER-BATES
Chairman
22 October 2009
CHIEF EXECUTIVE'S REVIEW
Results
The six months to 31 August 2009 has been a period of consolidation and
integration following the acquisitions made in the last two years. We have also
announced some major new developments in all of our divisions.
Total revenue from continuing operations amounted to GBP218.2m (2008: GBP199.2m)
with earnings after fleet financing costs (EAFFC) of GBP13.5m (2008: GBP13.4m)
and normalised profit before tax and restructuring costs of GBP12.4m (2008:
GBP11.0m). Statutory profit before tax was GBP11.1m (2008: GBP11.0m). EAFFC
comprises the underlying operating profit of GBP15.8m (2008: GBP15.2m) less
share based payments of GBP0.4m (2008: GBP0.4m) the fleet financing costs of
GBP1.9m (2008: GBP1.4m).
Earnings per share from continuing activities totalled 3.8p (2008:
2.2p). Earnings per share from continuing operations (normalised before
restructuring costs and allowing for a 28% tax charge) totalled 3.7p (2008:
3.7p).
The Group maintains a strong balance sheet, with net assets of GBP289.8m (29
February 2009: GBP279.2m). Non fleet-related net borrowing at GBP103.4m (28
February 2008: GBP67.3m) increased principally due to the asset-backed loans of
GBP29m, to part fund the new chilled distribution centre at Widnes and GBP5m to
part fund the acquisition of Stobart Air Limited. Cash (net) generated from
operations was GBP19.4m (2008: GBP11.0m) and net cash outflow was GBP3.3m (31
August 2008: GBP12.0m) after dividends paid. Gearing, excluding fleet financing
and related assets, was 26.3% (28 February 2009: 19.5%).
The effective tax rate for the period is 19.3%. This rate is lower than the
standard rate of 28% principally due to group relief claimed in respect of
losses arising in Stobart Properties Limited, a trading subsidiary undertaking.
Strategy
We continue our clear strategy to deliver on the Group's vision to become the
UK's leading multi-modal transport and logistics provider.
Stobart differentiates itself through the strength of its brand, its costing
model and its drive to provide customers with cost savings through open and
transparent pricing. The key aspect of our multimodal transport and logistics
solutions strategy is that we are in a unique position to provide our customers
with a comprehensive offer to meet all of their logistics requirements, whilst
also continuing to provide customers with the most cost efficient and
environmentally friendly solutions.
Stobart continues to attract interest from retailers and manufacturers who want
more flexibility in their supply chain solutions and we are confident that new
contracts will come on-board as customers seek to exit inflexible fixed priced
contracts.
We continue to expand our UK market share in a very fragmented market. We
already have a very strong blue-chip customer base across a broad range of
sectors with a significant presence in the food and drink sector with many
household name customers. We are able to offer ambient and chilled services
throughout the UK and Europe. We intend to increase volumes through innovative,
state-of-the-art transport and storage solutions across road, rail, sea and air
modes.
We have a unique pricing model, which is beneficial to customers and encourages
meeting of targets by ourselves and the customer and, put simply, cuts out
waste. We are able to offer this 'pay as you go' method due to our own-branded
fleet which are not restricted to a certain customer and our route-planning
technology which allows us to maximise truck utilisation and reduce the number
of empty miles.
We aim to develop our rail, ports and air divisions and where appropriate link
these together to give quick, efficient routes that are unique in the industry.
Our recent acquisition of Carlisle airport and development of the direct
Valencia to UK rail link are further steps towards our multimodal strategy.
We believe that we have the strongest brand in the industry and have continued
to develop this by harmonising the branding of acquired businesses such as
Stobart Air to maximise the power of the positive values attached to the brands.
Our current multi-modal portfolio includes the following assets and services:
* 1,600 trucks with utilisation rates at one of the highest levels in the industry
* Operations at over 40 locations in the UK and Europe
* State-of-the-art UK distribution centres at Widnes
* Successful inland rail freight terminal which receives 5 trains per day
* 5 rail freight services in partnership with customers including a unique service
from Valencia to the UK
* Two operational airports, with significant development potential to increase
activity
* Waterway port opportunity for development in the medium term
Increasingly, our current and potential customers are asking for the full
service offering and requiring our greener solutions.
Our business model is unique and robust; this means that we can capture
opportunities in times of economic downturn. We have a large customer base,
multimodal capability, high quality people and systems in place to protect us
against financial and operational risk.
Capital developments and financing
The Group currently holds a number of working capital and term facilities across
the various divisions and remains comfortably inside all covenant measures. Over
the past 12 months we have successfully balanced the requirements for asset
development funding alongside the desire to maintain competitive debt pricing
and the potential to refinance the historic facilities. During this period we
have maintained a solid relationship with our mainstream bank, RBS, who remain
very supportive of the Group, whilst developing strong relationships with new
core and specialist lenders. The time and effort spent on developing these
relationships has resulted in the Group being in a position where it can
consider a number of financing options as it looks to fund the key capital
project at Southend Airport and ensure that one facility due for renewal in
August 2010 is refinanced. In parallel with considering the ideal structure for
the Group we are assessing whether the improved market means the time is
appropriate to realise value from our existing asset portfolio for reinvestment
in future developments. We expect to be able to announce the completion of our
preferred route by the year end.
Environment
A key element of our strategy is the focus it brings to providing environmental
improvements. This is best quantified by our fleet utilisation for the Eddie
Stobart road fleet which at 83.5% means that only 16.5% of vehicles are
travelling without a load.
The Government and our customers are increasingly looking at achieving
sustainable environmental cost-effective solutions throughout their supply
chain. This is a key driver in everything we do and we are working hard to
eliminate waste through filling up empty journeys and considering other modes of
transport.
Load fill in the chilled division has increased by 9% from 70% to 76% in the
year reducing the empty space in trailers in that operation. The refrigerated
trailers used by our chilled fleet are 100% recyclable.
The Group is constantly reviewing its systems and procedures to realise
efficiencies, it is looking at automated planning systems and technology to
improve fuel consumption.
Core operations
Eddie Stobart
Eddie Stobart is the largest of the Group's divisions and includes its ambient
and chilled road transport and warehousing operations. It operates a fleet of
more than 1,600 trucks and 3,000 trailers and around 6 million square feet of
warehousing across 40 sites in the UK, Ireland and Europe.
UK Transport
A key feature of this first half has been the successful integration of the
James Irlam business into Eddie Stobart. All transport operations, depot network
operations, front and back office functions have now been fully integrated
without any interruption to our customers. The integrated operation now runs
circa 1,250 trucks, 3,000 trailers from common systems and processes.
Vehicle utilisation in the period to 30 August 2009 was 83.5%, a slight
reduction from the year end due to the integration of the James Irlam day and
night operations and ability to measure their utilisation from 1 March 2009. The
second phase of the integration, harnessing the synergies, has already commenced
and it is anticipated that the savings will be in the region of GBP0.5m this
financial year, with an annualised impact of GBP1.1 million.
Though the business has been faced with the tough economic conditions, new
business totalling circa GBP30 million has been secured. No customers have been
lost during the period and the margin has been maintained as a result of tight
operational and cost control and integration synergy savings. We announced a
further GBP25m distribution contract for Tesco Teesport in the period which
should help increase fleet utilisation further adding to profitability.
Chilled Transport
The chilled and ambient operations of Innovate Logistics were purchased from the
administrators in July 2008. The business has since been restructured,
rationalised and incorporated into the Chilled Transport and Warehousing
Divisions. As part of the restructuring programme, 2 sites were closed saving in
the region of GBP1m per annum.
Chilled Transport has performed well during the first half and has generated
positive earnings in each month to date. This performance is expected to
continue and improve further into the second half of the year and
beyond. Revenue has grown by 22% since January with new business wins including
the Co-op. Payroll costs have been further reduced through the recruitment
programme that has seen a 50% reduction in agency drivers. Load fill has
increased by 9% from 70% to 76%.
Key customers have been retained, with further business development and new
major customers added during the period. The Stobart chilled brand has grown in
strength through delivering a high level of customer service and we are now seen
as a major operater within the market place. We believe that significant
opportunities exist in the sector for future revenue growth.
The final stage of the integration will be implementation of the Eddie Stobart
technology systems in to the chilled operation, which should be up and running
during the second half.
Warehousing
Our warehousing operations comprise 6m sq feet of high-spec state of the art
facilities. Due to our customer mix of predominately blue-chip clients, products
handled include FMCG, pharmaceuticals, chilled and business-to-business. We
offer a multitude of services to these clients from unit, case or pallet pick,
to a full range of value added services such as co-packing and process
management. All activities and facilities are managed through our DWMS which
interfaces between both clients and their customers in real-time, managing high
complex throughputs, whilst validated to ensure regulatory compliance for MHRA
and SOX.
The first six months of 2009 have seen strong revenue growth continuing the
trend from 2008. Our newest site in Bardon has come on stream giving the Group
one of the most state-of-the-art warehousing facilities in the UK. This handles
75% of Nestlé UK's distribution and is contracted for 10 years. The site which
is one of the largest in the UK holds 105,000 pallets of which 50% of products
are stored in a fully automated high bay warehouse. The operations team are
focused on the delivery of new contracts for SCA Personal Care and Danone during
the second half of 2009. The business development team continues with a targeted
strategy for growth with both existing and new customers.
Investment to enhance the network continues with a significant refurbishment
programme in Bardon and the addition of a new facility in Daresbury (c360,000
sq.ft.) to accommodate the expanding long term relationship with Johnson &
Johnson in early 2010.
Stobart Ports
Our ports division currently comprises two main operations. An inland port
(container handling facility) near Widnes which currently handles around 100,000
shipping containers a year, and the nearby Port of Weston. This 44 acre site on
the Manchester Ship Canal has excellent potential for development as our
waterway port with close road, rail and waterway links.
The Ports division has maintained container volumes and inland transport through
the first 6 months by achieving a preferred carrier status with major UK
retailers. A trial daily rail service between Tilbury and Widnes has been
successfully operated over four months and this could be extended to a complete
train during the coming months. This limited trial in isolation has so far
removed over 30,000 kilometres of UK road transport.
The business has continued to drive efficiency into the Inland Terminal in
Widnes, which currently manages nearly 1,000 vehicle movements every day with a
dwell time of only 12 minutes per vehicle.
Following lower container volumes at the end of 2008 and early 2009, the ports
division costs were reviewed and truck numbers and overheads reduced. If the
signs of volume increases continue the division will be able to make use of
transport capabilities in the Eddie Stobart division.
The new 528,000 sq.
ft. chilled distribution facility has been delivered at Widnes with completion
achieved on time and in budget in July 2009. Preparation of the remaining
development land around the Widnes site has continued, with all surplus
buildings now demolished.
Stobart Rail
Within our rail division are two operations; infrastructure engineering and rail
freight transportation. The civil engineering operation is a leading force in
rail infrastructure maintenance, undertaking work such as bridge and line-side
maintenance and permanent way works. The freight division operates a growing
number of freight trains each week to complement our road haulage business.
The rail freight division has recently announced the development of a direct
chilled service from Valencia to the UK in partnership with DB Schenker. This is
the first train of this type ever between Spain and the UK. This is a unique
service which is expected to take 8.5m truck-miles off the road each year.
Stobart Rail's development operation has already carried out significant work
for other group companies including work at Widnes, the Bardon site and
development of Southend airport to a total value of GBP9.9m, making considerable
savings in the process and reducing the risks associated with the projects.
Stobart Air
Stobart Air has traded in line with expectations in the first half. The air
division comprises London Southend Airport, acquired in December 2008, and
Carlisle Lake District Airport, acquired at the end of May 2009 for GBP10.1m.
At London Southend Airport we have secured agreement with the DfT for the
introduction of the new rail station which will provide fast and frequent links
for passengers to Stratford (for the Olympics) and London Liverpool Street. The
development work has started and, subject to track possessions, we envisage that
the station will open in May 2010. We have leased an additional 40,000 sq ft to
a major aircraft maintenance organisation to allow them to significantly
increase their maintenance capacity at the airport enhancing the airport's
strong reputation for maintenance. In addition, through collaborative working,
the two local councils have recently agreed with the airport the operating
controls they would require if the airport were to bring an extended runway into
use.
Carlisle airport was brought into the Group during the first half and a new
Airport Director (who was formerly the operations Director at Luton Airport)
joined the airport in September 2009. Initial work focuses on reviewing the
operational cost structure. Plans are being considered for transfer of the
Carlisle transport and warehousing facilities from the current leased sites to a
purpose built facility on the airport site.
Discontinued activities
As at the previous year end, the investment properties, including One Plantation
Place, are classified in discontinued operations as they are part of a
co-ordinated disposal plan. The commercial property market is showing signs of
stabilising.
Outlook
The second half has started encouragingly and we expect to see strong growth
across our businesses.
Recently announced contracts and other developments in the second half include:
* Transport for Tesco Teesport began in September 2009 increasing revenue and
utilisation and we have other business developments that we hope to be able to
announce in the coming months.
* Good order book in Stobart Rail infrastructure engineering
* Rent and certain transport activities at the chilled distribution site in Widnes
began early in the second half
* The Valencia to UK direct rail freight service will commence operations in late
October 2009 operating a round trip each week
In addition, we are pleased to announce a further new contract gain. We have
been awarded a EUR13m per annum contract for Tesco in Donabate, Ireland which
substantiates our decision to enter the Irish market in 2008.
We have ongoing discussions with other major customers and potential customers
to further develop business opportunities and expect that these will continue to
grow organically our top line.
A great deal has been achieved during this period to consolidate and integrate
our businesses and develop and deliver the multi-modal transport and logistics
solutions which our customers are increasingly demanding. We remain confident
that the year will be a successful one and firmly believe in the longer term
growth potential of the Group.
ANDREW TINKLER
Chief Executive
22 October 2009
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 and mitigating factors have not changed from those previously
reported, namely:
* Business and financial strategy
* Consumer confidence
* Seasonality and abnormal weather
* Government legislation and regulation
* Airport safety and security
* Demand for integrated and outsourced transport and logistics
* Competition
* Nature of lease obligations
* Fuel prices
* Commercial property
* Acquisitions
* Capital expenditure
For greater detail on these risks and mitigating factors, please refer to our
2009 annual report.
Directors' responsibility statement
The Board confirms to the best of their knowledge:
- that the consolidated half year financial statements for the six months to 31
August 2009 have been prepared in accordance with IAS 34 'Interim Financial
Reporting'; and
- that the Half Year Report includes a fair review of the information required
by sections 4.2.7R and 4.2.8R of the Disclosure and Transparency Rules.
The above Statement of Directors' responsibilities was approved by the Board on
22 October 2009.
BEN WHAWELL
Chief Financial Officer
22 October 2009
Interim Consolidated Income Statement
For the six months ended 31 August 2009
+------------------------------------+--------+-----------+-----------+-----------+
| | | Six | Six | Year |
| | | months | months | ended 28 |
| | | ended 31 | ended 31 | February |
| | | August | August | 2009 |
| | | 2009 | 2008 | |
+------------------------------------+--------+-----------+-----------+-----------+
| | | Unaudited | Unaudited | Audited |
+------------------------------------+--------+-----------+-----------+-----------+
| | Notes | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Revenue | 4 | 218,245 | 199,199 | 431,062 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Operating expenses - underlying | | (202,438) | (184,045) | (399,711) |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Underlying operating profit | | 15,807 | 15,154 | 31,351 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| - Share based payment | 10 | (423) | (391) | (716) |
+------------------------------------+--------+-----------+-----------+-----------+
| - Restructuring costs | | (1,306) | - | (2,722) |
+------------------------------------+--------+-----------+-----------+-----------+
| - Credit for business purchase | | - | - | 3,609 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Profit before interest and tax | | 14,078 | 14,763 | 31,522 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Finance costs | | (3,445) | (4,106) | (8,161) |
+------------------------------------+--------+-----------+-----------+-----------+
| Finance income | | 442 | 375 | 581 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Profit before tax | | 11,075 | 11,032 | 23,942 |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Income tax | 5 | (2,139) | (6,232) | (2,797) |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Profit for the period from | | 8,936 | 4,800 | 21,145 |
| continuing operations | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Discontinued operations | | (416) | (25,104) | (29,916) |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Profit / (loss) for the period | | 8,520 | (20,304) | (8,771) |
| attributable to equity holders of | | | | |
| the parent | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Earnings/(loss) per ordinary share | 7 | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| From continuing operations | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Basic | | 3.75p | 2.24p | 9.81p |
+------------------------------------+--------+-----------+-----------+-----------+
| Diluted | | 3.73p | 2.24p | 9.77p |
+------------------------------------+--------+-----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| From continuing and discontinued | | | | |
| operations | | | | |
+------------------------------------+--------+-----------+-----------+-----------+
| Basic | | 3.58p | (9.49p) | (4.07p) |
+------------------------------------+--------+-----------+-----------+-----------+
| Diluted | | 3.56p | (9.49p) | (4.07p) |
+------------------------------------+--------+-----------+-----------+-----------+
Interim Consolidated Statement of Comprehensive Income
For the six months ended 31 August 2009
+--------------------------------------+------+-----------+-----------+-----------+
| | | Six | Six | Year |
| | | months | months | ended 28 |
| | | ended 31 | ended 31 | February |
| | | August | August | 2009 |
| | | 2009 | 2008 | |
+--------------------------------------+------+-----------+-----------+-----------+
| | | Unaudited | Unaudited | Audited |
+--------------------------------------+------+-----------+-----------+-----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+------+-----------+-----------+-----------+
| | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| Profit / (loss) for the period | | 8,520 | (20,304) | (8,771) |
+--------------------------------------+------+-----------+-----------+-----------+
| | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| Exchange differences on translation | | - | - | (336) |
| of foreign operations | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| Reversal of revaluation of land and | | - | - | (340) |
| buildings | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| Other comprehensive income / (loss) | | - | - | (676) |
| for the period, net of tax | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| Total comprehensive income / (loss) | | 8,520 | (20,304) | (9,447) |
| for the period, net of tax | | | | |
| attributable to equity holders of | | | | |
| the parent | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
| | | | | |
+--------------------------------------+------+-----------+-----------+-----------+
+------------------------------------------+---------+-----------+-----------+
| | | 31 August | 28 |
| | | 2009 | February |
| | | | 2009 |
+------------------------------------------+---------+-----------+-----------+
| | | Unaudited | Audited |
+------------------------------------------+---------+-----------+-----------+
| | Notes | GBP'000 | GBP'000 |
+------------------------------------------+---------+-----------+-----------+
| | | | |
+------------------------------------------+---------+-----------+-----------+
| Non-current Assets | | | |
+------------------------------------------+---------+-----------+-----------+
| Property, plant and equipment | | | |
+------------------------------------------+---------+-----------+-----------+
| - Land and buildings | 8 | 179,519 | 131,435 |
+------------------------------------------+---------+-----------+-----------+
| - Plant and machinery | 8 | 16,234 | 15,302 |
+------------------------------------------+---------+-----------+-----------+
| - Fixtures, fittings and equipment | 8 | 2,260 | 2,922 |
+------------------------------------------+---------+-----------+-----------+
| - Commercial vehicles | 8 | 56,812 | 61,901 |
+------------------------------------------+---------+-----------+-----------+
| | | 254,825 | 211,560 |
+------------------------------------------+---------+-----------+-----------+
| Intangible assets | | 229,806 | 223,258 |
+------------------------------------------+---------+-----------+-----------+
| Available for sale investments | | 10 | 22 |
+------------------------------------------+---------+-----------+-----------+
| | | 484,641 | 434,840 |
+------------------------------------------+---------+-----------+-----------+
| | | | |
+------------------------------------------+---------+-----------+-----------+
| Current Assets | | | |
+------------------------------------------+---------+-----------+-----------+
| Inventories | | 1,739 | 1,700 |
+------------------------------------------+---------+-----------+-----------+
| Trade and other receivables | | 72,815 | 72,104 |
+------------------------------------------+---------+-----------+-----------+
| Cash and cash equivalents | 9 | 8,762 | 7,251 |
+------------------------------------------+---------+-----------+-----------+
| | | 83,316 | 81,055 |
+------------------------------------------+---------+-----------+-----------+
| Assets of disposal groups classified as | | 2,363 | 2,900 |
| held for | | | |
| sale | | | |
+------------------------------------------+---------+-----------+-----------+
| | | 85,679 | 83,955 |
+------------------------------------------+---------+-----------+-----------+
| Total Assets | | 570,320 | 518,795 |
+------------------------------------------+---------+-----------+-----------+
| | | | |
+------------------------------------------+---------+-----------+-----------+
| Non-current Liabilities | | | |
+------------------------------------------+---------+-----------+-----------+
| Loans and borrowings | 9 | 91,696 | 90,367 |
+------------------------------------------+---------+-----------+-----------+
| Other liabilities | | 15,567 | 15,420 |
+------------------------------------------+---------+-----------+-----------+
| Deferred tax liability | | 37,402 | 34,269 |
+------------------------------------------+---------+-----------+-----------+
| | | 144,665 | 140,056 |
+------------------------------------------+---------+-----------+-----------+
| | | | |
+------------------------------------------+---------+-----------+-----------+
| Current Liabilities | | | |
+------------------------------------------+---------+-----------+-----------+
| Trade and other payables | | 58,987 | 57,559 |
+------------------------------------------+---------+-----------+-----------+
| Loans and borrowings | 9 | 71,915 | 37,775 |
+------------------------------------------+---------+-----------+-----------+
| Corporation tax liability | | 1,245 | 178 |
+------------------------------------------+---------+-----------+-----------+
| | | 132,147 | 95,512 |
+------------------------------------------+---------+-----------+-----------+
| Liabilities directly | | 3,698 | 3,997 |
| associated with the assets | | | |
| classified as held for | | | |
| sale | | | |
+------------------------------------------+---------+-----------+-----------+
| | | 135,845 | 99,509 |
+------------------------------------------+---------+-----------+-----------+
| Total Liabilities | | 280,510 | 239,565 |
+------------------------------------------+---------+-----------+-----------+
| | | | |
+------------------------------------------+---------+-----------+-----------+
| Net Assets | | 289,810 | 279,230 |
+------------------------------------------+---------+-----------+-----------+
Interim Consolidated Statement of Financial Position
As at 31 August 2009
+-----------------------------------------+---------+-------------+-----------+
| | | 31 August | 28 |
| | | 2009 | February |
| | | | 2009 |
+-----------------------------------------+---------+-------------+-----------+
| | | Unaudited | Audited |
+-----------------------------------------+---------+-------------+-----------+
| | | GBP'000 | GBP'000 |
+-----------------------------------------+---------+-------------+-----------+
| | | | |
+-----------------------------------------+---------+-------------+-----------+
| Capital and reserves | | | |
+-----------------------------------------+---------+-------------+-----------+
| Issued share capital | | 25,079 | 24,175 |
+-----------------------------------------+---------+-------------+-----------+
| Share premium | | 164,508 | 155,805 |
+-----------------------------------------+---------+-------------+-----------+
| Foreign currency exchange reserve | | (468) | (468) |
+-----------------------------------------+---------+-------------+-----------+
| Reserve for own shares held by EBT | | (803) | (803) |
+-----------------------------------------+---------+-------------+-----------+
| Retained earnings | | 101,494 | 100,521 |
+-----------------------------------------+---------+-------------+-----------+
| | | | |
+-----------------------------------------+---------+-------------+-----------+
| Total Equity | | 289,810 | 279,230 |
+-----------------------------------------+---------+-------------+-----------+
Interim Consolidated Statement of Changes in Equity
For the six months ended 31 August 2009
+----------------------+---------+----------+----------+---------+----------+---------+
| | Attributable to equity holders of the parent |
+----------------------+--------------------------------------------------------------+
| | Issued | Share | Foreign | Reserve | Retained | Total |
| | share | premium | currency | for own | earnings | equity |
| | capital | | exchange | shares | | |
| | | | reserve | held by | | |
| | | | | EBT | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+---------+----------+----------+---------+----------+---------+
| Balance at 1 March | 24,175 | 155,805 | (468) | (803) | 100,521 | 279,230 |
| 2009 | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| Profit for the | - | - | - | - | 8,520 | 8,520 |
| period | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| Other comprehensive | - | - | - | - | - | - |
| income | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| Total comprehensive | - | - | - | - | 8,520 | 8,520 |
| income | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| Proceeds on share | 904 | 8,703 | - | - | - | 9,607 |
| issue | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| Share issue costs | - | - | - | - | - | - |
+----------------------+---------+----------+----------+---------+----------+---------+
| Share based payment | - | - | - | - | 431 | 431 |
| credit | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
| Dividends | - | - | - | - | (7,978) | (7,978) |
+----------------------+---------+----------+----------+---------+----------+---------+
| Balance at 31 August | 25,079 | 164,508 | (468) | (803) | 101,494 | 289,810 |
| 2009 | | | | | | |
+----------------------+---------+----------+----------+---------+----------+---------+
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| | Attributable to equity holders of the parent |
+---------------------+----------------------------------------------------------------------------+
| | Issued | Share | Foreign | Reserve | Revaluat'n | Retained | Total |
| | share | premium | currency | for own | reserve | earnings | equity |
| | capital | | exchange | shares | | | |
| | | | reserve | held by | | | |
| | | | | EBT | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Balance at 1 March | 16,063 | 70,535 | (132) | (803) | 340 | 123,142 | 209,145 |
| 2008 | | | | | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Loss for the period | - | - | - | - | - | (20,304) | (20,304) |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Other comprehensive | - | - | - | - | - | - | |
| income | | | | | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Total comprehensive | - | - | - | - | - | (20,304) | (20,304) |
| income / (loss) | | | | | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Proceeds on share | 6,536 | 78,441 | - | - | - | - | 84,977 |
| issue | | | | | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Share issue costs | - | (2,060) | - | - | - | - | (2,060) |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Share based payment | - | - | - | - | - | 391 | 391 |
| credit | | | | | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Dividends | - | - | - | - | - | (8,513) | (8,513) |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
| Balance at 31 | 22,599 | 146,916 | (132) | (803) | 340 | 94,716 | 263,636 |
| August 2008 | | | | | | | |
+---------------------+---------+----------+----------+---------+------------+----------+----------+
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| | Attributable to equity holders of the parent |
+---------------------+---------------------------------------------------------------------------+
| | Issued | Share | Foreign | Reserve | Revaluat'n | Retained | Total |
| | share | premium | currency | for own | reserve | earnings | equity |
| | capital | | exchange | shares | | | |
| | | | reserve | held by | | | |
| | | | | EBT | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Balance at 1 March | 16,063 | 70,535 | (132) | (803) | 340 | 123,142 | 209,145 |
| 2008 | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Loss for the year | - | - | - | - | - | (8,771) | (8,771) |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Other comprehensive | - | - | (336) | - | (340) | - | (676) |
| income | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Total comprehensive | - | - | (336) | - | (340) | (8,771) | (9,447) |
| income/(loss) | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Proceeds on share | 8,112 | 88,366 | - | - | - | - | 96,478 |
| issue | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Share issue costs | - | (3,096) | - | - | - | - | (3,096) |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Share based payment | - | - | - | - | - | 765 | 765 |
| credit | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Dividends | - | - | - | - | - | (14,615) | (14,615) |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
| Balance at 28 | 24,175 | 155,805 | (468) | (803) | - | 100,521 | 279,230 |
| February 2009 | | | | | | | |
+---------------------+---------+---------+----------+---------+------------+----------+----------+
Interim Consolidated Cash Flow Statement For the six months ended 31 August 2009
+------------------------------+-----------+-----------+------------+------------+
| | | Six | Six months | Year ended |
| | | months | ended 31 | 28 |
| | | ended 31 | August | February |
| | | August | 2008 | 2009 |
| | | 2009 | | |
+------------------------------+-----------+-----------+------------+------------+
| | | Unaudited | Unaudited | Audited |
+------------------------------+-----------+-----------+------------+------------+
| | Notes | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Cash generated from | 11 | 19,703 | 10,966 | 47,946 |
| operations | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Income taxes paid | | (314) | (78) | (1,183) |
+------------------------------+-----------+-----------+------------+------------+
| Net cash flow from operating | | 19,389 | 10,888 | 46,763 |
| activities | | | | |
+------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Acquisition of subsidiaries | | (414) | (66,132) | (76,451) |
| and other businesses - net | | | | |
| cash paid | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Purchase of property, plant | | (45,851) | (30,840) | (54,738) |
| and equipment | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Proceeds from sale of | | 8,306 | 1,239 | 4,777 |
| property, plant and | | | | |
| equipment | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Dividends received from | | 63 | 940 | 614 |
| joint ventures | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Net loans (advanced to) / | | 360 | (3,191) | (2,807) |
| repaid by joint ventures | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Interest received | | 442 | 436 | 650 |
+------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Net cash flow from investing | | (37,094) | (97,548) | (127,955) |
| activities | | | | |
+------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Issue of ordinary shares | | - | 72,917 | 83,382 |
| less costs of issue | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Dividend paid on ordinary | | (7,978) | (8,513) | (14,615) |
| shares | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Proceeds from new finance | | 10,754 | 18,730 | 33,860 |
| leases | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Repayment of finance leases | | (12,709) | (7,051) | (15,751) |
+------------------------------+-----------+-----------+------------+------------+
| Proceeds from new long term | | 34,460 | 24,170 | 4,581 |
| borrowings | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Repayment of long term | | (6,258) | (21,409) | (2,684) |
| borrowings | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Interest paid | | (3,838) | (4,136) | (8,355) |
+------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Net cash flow from financing | | 14,431 | 74,708 | 80,418 |
| activities | | | | |
+------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Decrease in cash and cash | | (3,274) | (11,952) | (774) |
| equivalents | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Cash and cash equivalents at | | (9,114) | (8,340) | (8,340) |
| beginning of period | | | | |
+------------------------------+-----------+-----------+------------+------------+
| Cash and cash equivalents at | | (12,388) | (20,292) | (9,114) |
| end of period | | | | |
+ +-----------+-----------+------------+------------+
| | | | | |
+------------------------------+-----------+-----------+------------+------------+
+------------------------------+-----------+------------+-----------+------------+
| Cash | | | | |
+------------------------------+-----------+------------+-----------+------------+
| - continuing | | 8,762 | 4,197 | 7,251 |
+------------------------------+-----------+------------+-----------+------------+
| - included in disposal | | 28 | 353 | 207 |
| group | | | | |
+------------------------------+-----------+------------+-----------+------------+
| | | | | |
+------------------------------+-----------+------------+-----------+------------+
| Overdraft | | (21,178) | (24,842) | (16,572) |
+------------------------------+-----------+------------+-----------+------------+
| | | | | |
+------------------------------+-----------+------------+-----------+------------+
| Cash and cash equivalents at | | (12,388) | (20,292) | (9,114) |
| end of period | | | | |
+ + +------------+-----------+------------+
| | | | | |
+------------------------------+-----------+------------+-----------+------------+
1 Accounting policies of Stobart Group Limited
Corporate information
The interim consolidated financial statements of the Group for the six months
ended 31 August 2009 were authorised for issue in accordance with a resolution
of the directors on 22 October 2009.
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 4.
Basis of preparation
The interim consolidated financial statements of the Group for the six months
ended 31 August 2009 have been prepared in accordance with IAS 34 Interim
Financial Reporting.
The interim 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
2009. Except for the 28 February 2009 comparatives, the financial information
set out herein is unaudited but has been reviewed by the auditors and their
report to the Company is attached.
These interim consolidated financial statements are unaudited. The comparative
financial information set out in these interim consolidated financial statements
do not constitute the Group's statutory accounts for the period ended 28
February 2009 but have been derived from the accounts. Statutory accounts for
the period ended 28 February 2009 have been published. The auditors have
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 IFRS as adopted by the European Union.
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 to 28 February 2009 except
for the adoption of new Standards and Interpretations as of 1 January 2009 noted
below:
IFRS 2 Share based payments - Vesting conditions and cancellations
The standard has been amended to clarify the definition of vesting conditions
and to prescribe the accounting treatment of an award that is effectively
cancelled because a non-vesting condition is not satisfied. The adoption of this
amendment did not have any impact on the financial position or performance of
the Group.
IFRS 7 Financial Instruments - Disclosures
The amended standard requires additional disclosure about fair value measurement
and liquidity risk. The adoption of this amendment did not did not have a
significant impact on the relevant disclosures.
IFRS 8 Operating segments
This standard requires disclosure of information about the Group's operating
segments and replaces the requirement to determine primary (business) and
secondary (geographical) reporting segments of the Group. Adoption of this
Standard did not have any effect on the financial position or performance of the
Group. The Group determined that the operating segments were the same as the
business segments previously identified under IAS 14 Segmental Reporting.
Additional disclosures about each of these segments are disclosed in note 4,
including revised comparative information.
IAS 1 Revised Presentation of Financial Statements
The revised Standard separates owner and non-owner changes in equity. The
statement of changes in equity includes only details of transactions with
owners, with non-owner changes in equity presented as a single line. In
addition, the Standard introduces the statement of comprehensive income: it
presents all items of recognised income and expense, either in one single
statement, or as two linked statements. The Group has elected to present two
statements.
Improvements to IFRS
In May 2008 the Board issued its first omnibus of amendments to its standards,
primarily with a view to removing inconsistencies and clarify wording. There are
separate transitional provisions for each standard. The adoption of the related
amendments to the following standards did not have any impact on the accounting
policies, financial position or performance of the Group:
IAS 1 Presentation of Financial Statements
IAS 16 Property Plant and Equipment
IAS 23 Borrowing costs
IAS 38 Intangible Assets
IFRS 5 Non-current Assets Held for Sales and Discontinued Operations
IFRS 7 Financial Instruments: Disclosures
IAS 8 Accounting Policies, Change in Accounting Estimates and Error
IAS 10 Events after the Reporting Period
IAS 16 Property, Plant and Equipment
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosures of Government Assistance
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investment in Associates
IAS 31 Interest in Joint Ventures
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 39 Financial Instruments: Recognition and Measurement
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. In line with retail cycles,
the higher seasonal sales in the months pre-Christmas is balanced by the lower
seasonal sales in the months after Christmas both in the second six months of
our financial year.
3 Business combinations
Acquisitions in the period from 1 March 2009 to 31 August 2009
Acquisition of Stobart Air Limited
On 30 May 2009 the group acquired 100% of the voting rights of Stobart Air
Limited, an unlisted company based in the United Kingdom, which operates a
commercial airport.
The provisional fair value of the identifiable assets and liabilities of Stobart
Air Limited as at the date of acquisition and the corresponding carrying amounts
immediately before the acquisition were:
+-------------------------------------------+--------------+---------------+
| | Fair value | Previous |
| | recognised | carrying |
| | on | value |
| | acquisition | |
+-------------------------------------------+--------------+---------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------+--------------+---------------+
| | | |
+-------------------------------------------+--------------+---------------+
| Property, plant and equipment | 14,153 | 4,746 |
+-------------------------------------------+--------------+---------------+
| Cash and cash equivalents | 32 | 32 |
+-------------------------------------------+--------------+---------------+
| Trade and other receivables | 224 | 224 |
+-------------------------------------------+--------------+---------------+
| Inventories | 47 | 47 |
+-------------------------------------------+--------------+---------------+
| | 14,456 | 5,049 |
+-------------------------------------------+--------------+---------------+
| | | |
+-------------------------------------------+--------------+---------------+
| Trade payables | (357) | (357) |
+-------------------------------------------+--------------+---------------+
| Other payables and deferred income | (7,959) | (7,759) |
+-------------------------------------------+--------------+---------------+
| Deferred tax | (2,634) | - |
+-------------------------------------------+--------------+---------------+
| | (10,950) | (8,116) |
+-------------------------------------------+--------------+---------------+
| Net assets | 3,506 | 3,067 |
+-------------------------------------------+--------------+---------------+
| Goodwill arising on acquisition | 6,548 | |
+-------------------------------------------+--------------+---------------+
| Total consideration | 10,054 | |
+-------------------------------------------+--------------+---------------+
The total cost of the combination was GBP10,054,000 and comprised the following:
+--------------------------------------------------------+---------------+
| | GBP'000 |
+--------------------------------------------------------+---------------+
| Cash | - |
+--------------------------------------------------------+---------------+
| Shares issued | 9,607 |
+--------------------------------------------------------+---------------+
| Costs associated with the acquisition | 447 |
+--------------------------------------------------------+---------------+
| Total | 10,054 |
+--------------------------------------------------------+---------------+
The group issued 9,041,957 ordinary shares with a fair value of GBP1.06 each.
This price was the market value at the date of the acquisition.
The goodwill of GBP6,548,000 represents the fair value of the future earning
potential of the business and other intangible assets, which cannot be
individually separated and reliably measured due to their nature, in excess of
the fair value of net assets identified. These intangible assets include
expected synergies available through development of the site including transfer
of the Carlisle transport depot to the airport site.
Included in other payables and deferred income were balances owed to the vendor
of GBP4.6m which were repaid immediately following acquisition under the terms
of the option which stipulated that the part of the consideration was initially
allocated to repayment of these balances.
The initial accounting for the acquisition is provisional due to the proximity
of the acquisition to the period end.
Stobart Air Limited contributed revenue of GBP0.3m in the current period and
profit before taxation of GBP0.0m. If the acquisition had been effective from 1
March 2009, the contribution to revenue would be GBP0.6m and the contribution to
profit before tax would be GBP0.0m.
Completion of acquisitions in the previous period where the acquisition
accounting was determined only provisionally
Acquisition of certain parts of the chilled and ambient operations of Innovate
Logistics Limited
The accounting for the acquisition of certain parts of the chilled and ambient
operations of Innovate Logistics Limited was completed in the period with no
further adjustments made.
Acquisition of London Southend Airport Company Limited
The accounting for the acquisition of London Southend Airport Company Limited
was completed in the period with no further adjustments made.
4 Segmental information
For management purposes, the Group is organised into business units based on
their products and services and has four reportable operating segments as
follows:
The Eddie Stobart segment specialises in haulage, distribution, warehousing,
property and process management services and merchandising.
The Stobart Rail segment specialises in infrastructure engineering and rail
freight services.
The Stobart Ports segment specialises in inland port and waterport services,
warehousing and distribution.
The Stobart Air segment specialises in operation of commercial airports.
Management monitors the results of its business units separately for the
purposes of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on profit or loss, which in
certain respects, as explained in the table below, is measured differently from
profit or loss in the consolidated financial statements. The main segmental
profit measure is earnings after fleet financing costs but before restructuring
costs.
Income taxes, restructuring costs, non-fleet finance costs and certain central
costs are managed on a group basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm's length basis in a
manner similar to transactions with third parties.
+-------------------+---------+---------+---------+---------+--------------+---------+
| Period ended 31 | Eddie | Stobart | Stobart | Stobart | Adjustments | Group |
| August 2009 | Stobart | Rail | Ports | Air | and | |
| | | | | | eliminations | |
+-------------------+---------+---------+---------+---------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Revenue | | | | | | |
+-------------------+---------+---------+---------+---------+--------------+---------+
| External | 188,673 | 20,139 | 6,254 | 3,179 | - | 218,245 |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Internal | - | 9,903 | - | - | (9,903) | - |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Total revenue | 188,673 | 30,042 | 6,254 | 3,179 | (9,903) | 218,245 |
+-------------------+---------+---------+---------+---------+--------------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Segment profit | 11,955 | 2,295 | 1,491 | 36 | (2,256) | 13,521 |
| (after fleet | | | | | | |
| financing costs) | | | | | | |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Restructuring | | | | | | (1,306) |
| costs | | | | | | |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Other finance | | | | | | (1,140) |
| costs | | | | | | |
+-------------------+---------+---------+---------+---------+--------------+---------+
| Profit before tax | | | | | | 11,075 |
+-------------------+---------+---------+---------+---------+--------------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+--------------+---------+
Inter-segment revenues are eliminated on consolidation.
Included in adjustments and eliminations are central costs of GBP1,744,000
(2008: GBP936,000) and intragroup profit of GBP512,000 (2008: GBPnil).
+------------------+----------+---------+---------+---------+--------------+---------+
| Period ended 31 | Eddie | Stobart | Stobart | Stobart | Adjustments | Group |
| August 2008 | Stobart | Rail | Ports | Air | and | |
| | | | | | eliminations | |
+------------------+----------+---------+---------+---------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+----------+---------+---------+---------+--------------+---------+
| Revenue | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
| External | 179,491 | 11,172 | 8,536 | - | - | 199,199 |
+------------------+----------+---------+---------+---------+--------------+---------+
| Internal | - | 871 | - | - | (871) | - |
+------------------+----------+---------+---------+---------+--------------+---------+
| Total revenue | 179,491 | 12,043 | 8,536 | - | (871) | 199,199 |
+------------------+----------+---------+---------+---------+--------------+---------+
| | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
| Segment profit | 11,445 | 1,210 | 1,725 | - | (936) | 13,444 |
| (after fleet | | | | | | |
| financing costs) | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
| Restructuring | | | | | | - |
| costs | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
| Other finance | | | | | | (2,412) |
| costs | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
| Profit before | | | | | | 11,032 |
| tax | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
| | | | | | | |
+------------------+----------+---------+---------+---------+--------------+---------+
+------------------+----------+---------+----------+---------+--------------+---------+
| | Eddie | Stobart | Stobart | Stobart | Adjustments | Group |
| | Stobart | Rail | Ports | Air | and | |
| | | | | | eliminations | |
+------------------+----------+---------+----------+---------+--------------+---------+
| Segment assets | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+----------+---------+----------+---------+--------------+---------+
| | | | | | | |
+------------------+----------+---------+----------+---------+--------------+---------+
| At 31 August | 378,540 | 26,963 | 136,350 | 56,065 | (29,961) | 567,957 |
| 2009 | | | | | | |
+------------------+----------+---------+----------+---------+--------------+---------+
| At 28 February | 374,144 | 26,728 | 100,795 | 37,880 | (23,652) | 515,895 |
| 2009 | | | | | | |
+------------------+----------+---------+----------+---------+--------------+---------+
Assets of GBP2,363,000 relating to discontinued activities are not included
above (28 February 2008: GBP2,900,000).
5Taxation
Taxation on profit on ordinary activities
+-----------------------------------------+-----------+-----------+----------+
| Tax charged in the income statement | Six | Six | Year |
| | months | months | ended 28 |
| | ended 31 | ended 31 | February |
| | August | August | 2009 |
| | 2009 | 2008 | |
+-----------------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
+-----------------------------------------+-----------+-----------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+-----------+----------+
| | | | |
+-----------------------------------------+-----------+-----------+----------+
| Current income tax: | | | |
+-----------------------------------------+-----------+-----------+----------+
| UK Corporation tax - continuing | 2,378 | 3,034 | - |
| operations | | | |
+-----------------------------------------+-----------+-----------+----------+
| - discontinued operations | 31 | - | - |
+-----------------------------------------+-----------+-----------+----------+
| | 2,409 | 3,034 | - |
+-----------------------------------------+-----------+-----------+----------+
| Adjustment in respect of prior years | (1,010) | | (399) |
+-----------------------------------------+-----------+-----------+----------+
| Total current tax | 1,399 | 3,034 | (399) |
+-----------------------------------------+-----------+-----------+----------+
| | | | |
+-----------------------------------------+-----------+-----------+----------+
| Deferred tax: | | | |
+-----------------------------------------+-----------+-----------+----------+
| Origination and reversal of timing | 771 | 20 | (1,149) |
| differences | | | |
+-----------------------------------------+-----------+-----------+----------+
| Impact of abolition of Industrial | - | 3,178 | 3,978 |
| Buildings Allowances | | | |
+-----------------------------------------+-----------+-----------+----------+
| Adjustment in respect of prior years | - | - | 367 |
+-----------------------------------------+-----------+-----------+----------+
| Total deferred tax charge | 771 | 3,198 | 3,196 |
+-----------------------------------------+-----------+-----------+----------+
| | | | |
+-----------------------------------------+-----------+-----------+----------+
| Total charge in the income statement | 2,170 | 6,232 | 2,797 |
+-----------------------------------------+-----------+-----------+----------+
The effective tax rate on continuing operations of 19.3% is lower than the
standard rate of 28% principally due to group relief claimed in respect of
losses arising in Stobart Properties Limited, a trading subsidiary undertaking.
6 Dividends
A final dividend of 3.3p per share totalling GBP7,977,629 was declared on 12 May
2009 and was paid on 22 June 2009.
An interim dividend of 2.0p per share totalling GBP5,015,766 was declared on 22
October 2009 and will be paid on 10 December 2009. This is not recognised as a
liability at 31 August 2009.
7 Earnings per share
The weighted average number of shares used in the earnings per share calculation
at 31 August 2009 was 238,286,604 (28 February 2009: 215,585,798, 31 August
2008: 213,914,119).
The total number of shares in issue at 31 August 2009 was 250,788,270 (28
February 2009: 241,746,317). On 31 May 2009, 9,041,957 shares were issued in
relation to the acquisition of Stobart Air Limited.
The normalised basic earnings per share are 3.7p (31 August 2008: 3.7p). The
numerator used in calculating the normalised earnings per share of GBP8,914,000
(31 August 2008: GBP7,943,000) is the profit before tax from continuing
operations of GBP11,075,000 (31 August 2008: GBP11,032,000) plus the
restructuring costs of GBP1,306,000 (31 August 2008: GBPnil) and allowing for
tax at 28% of GBP3,467,000 (31 August 2008: GBP3,089,000).
8 Property, plant and equipment
Additions and disposals
During the six months ended 31 August 2009, the Group acquired assets with a
cost of GBP45,837,000 not including amounts acquired through business
combinations. This included development of a chilled distribution centre in
Widnes by our Ports division. The amount of borrowing costs capitalised during
the six months ended 31 August 2009 was GBP133,000 (2008: GBPnil).
Assets with a book value of GBP8,522,000 were disposed of by the Group during
the six months ended 31 August 2009 resulting in a net loss on disposal of
GBP216,000.
Capital commitments
At 31 August 2009, the Group had capital commitments of GBP1,602,479 (2008:
GBP21,466,000) principally relating to tractor units.
9 Analysis of net debt
+--------------------------------------------+--+-----------+------------+
| | | 31 August | 28 |
| | | 2009 | February |
| | | | 2009 |
+--------------------------------------------+--+-----------+------------+
| | | Unaudited | Audited |
+--------------------------------------------+--+-----------+------------+
| | | GBP'000 | GBP'000 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Cash | | 8,762 | 7,458 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Loans and borrowings | | | |
+--------------------------------------------+--+-----------+------------+
| Non-current | | | |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Fixed rate: | | | |
+--------------------------------------------+--+-----------+------------+
| - Income shares | | - | 5,240 |
+--------------------------------------------+--+-----------+------------+
| - Obligations under finance leases and | | 39,257 | 35,583 |
| hire purchase contracts | | | |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Variable rate: | | | |
+--------------------------------------------+--+-----------+------------+
| - Loan notes | | 6,000 | 6,000 |
+--------------------------------------------+--+-----------+------------+
| - Bank loans | | 46,439 | 43,544 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| | | 91,696 | 90,367 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Current | | | |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Fixed rate: | | | |
+--------------------------------------------+--+-----------+------------+
| - Other borrowings | | 223 | 658 |
+--------------------------------------------+--+-----------+------------+
| - Income shares | | 5,254 | - |
+--------------------------------------------+--+-----------+------------+
| - Obligations under finance leases and | | 12,177 | 17,806 |
| hire purchase contracts | | | |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Variable rate borrowings | | | |
+--------------------------------------------+--+-----------+------------+
| - Overdrafts | | 21,177 | 16,572 |
+--------------------------------------------+--+-----------+------------+
| - Bank loans | | 33,084 | 2,739 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| | | 71,915 | 37,775 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Total loans and borrowings | | 163,611 | 128,142 |
+--------------------------------------------+--+-----------+------------+
| | | | |
+--------------------------------------------+--+-----------+------------+
| Net debt | | 154,849 | 120,684 |
+--------------------------------------------+--+-----------+------------+
The main increases in net debt have resulted from additional bank loans of
GBP29m to fund the development of the chilled distribution centre at Widnes and
of GBP5m to part fund Carlisle Lake District Airport. The income shares are
classified as due within one year as they are convertible or redeemable from 31
March 2010.
10 Share based payments
On 20 August 2009, 2.4m share options were granted to directors and management
under the Stobart Executive Equity Incentive Plan. The exercise price of the
options is nil.
The Incentive Plan is designed to provide incentives to key employees of the
Group who are selected to participate by the Group's remuneration committee.
Participants are allocated units, each of which will represent one 10p ordinary
share and will vest on the third anniversary of the date of grant. Forty percent
of the units granted 20 August 2009 will vest subject to the total shareholder
return ("TSR") of the Group measured over a three year performance period from
the date of grant relative to a comparator group of companies. Sixty percent of
the units granted 20 August 2009 will vest subject to the achievement of a level
of earnings per share ("EPS") over the year to 29 February 2012.
The fair value of the options granted without market based vesting conditions
are estimated using a Black Scholes model taking into account the terms and
conditions upon which the options were granted. The fair value of the options
granted with market based vesting conditions are estimated using a Monte Carlo
model taking into account the terms and conditions upon which the options were
granted.
11 Cash generated from operations
+-----------------------------+----------+-----------+-----------+-----------+
| | | Six | Six | Year to |
| | | months | months | 29 |
| | | ended 31 | ended 31 | February |
| | | August | August | 2009 |
| | | 2009 | 2008 | |
+-----------------------------+----------+-----------+-----------+-----------+
| | | Unaudited | Unaudited | Audited |
+-----------------------------+----------+-----------+-----------+-----------+
| | | GBP'000 | GBP'000 | GBP,000 |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Profit before tax on | | 11,075 | 11,032 | 23,942 |
| continuing operations | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Loss before tax on | | (385) | (25,104) | (29,916) |
| discontinued operations | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Profit / (loss) before tax | | 10,690 | (14,072) | (5,974) |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Adjustments to reconcile | | | | |
| profit / (loss) before tax | | | | |
| to net cash flows: | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Non-cash: | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Movement in unrealised loss | | - | - | 1,803 |
| on revaluation of | | | | |
| investment properties | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Realised loss/(profit) on | | 216 | (429) | (678) |
| sale of property, plant and | | | | |
| equipment | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Write-down of associates | | (63) | 23,894 | 26,650 |
| and joint ventures | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Depreciation of property, | | 8,203 | 6,194 | 13,430 |
| plant and equipment | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Investment income | | (442) | (436) | (650) |
+-----------------------------+----------+-----------+-----------+-----------+
| Interest expense | | 3,718 | 4,136 | 8,475 |
+-----------------------------+----------+-----------+-----------+-----------+
| Amortisation of income | | 15 | 15 | 29 |
| share issue costs | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Credit for business | | - | - | (3,609) |
| purchase | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Share option charge | | 431 | 391 | 765 |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Working capital | | | | |
| adjustments: | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| (Increase) / decrease in | | 8 | (46) | 157 |
| inventories | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| (Increase) / decrease in | | 207 | (16,989) | 4,440 |
| trade and other receivables | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Increase / (decrease) in | | (3,280) | 8,308 | 3,108 |
| trade and other payables | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Cash generated from | | 19,703 | 10,966 | 47,946 |
| operations | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Issue of ordinary shares | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| Issue of ordinary shares | | - | 74,977 | 86,478 |
+-----------------------------+----------+-----------+-----------+-----------+
| Issue costs paid on | | - | (2,060) | (3,096) |
| issuance of ordinary shares | | | | |
+-----------------------------+----------+-----------+-----------+-----------+
| | | - | 72,917 | 83,382 |
+-----------------------------+----------+-----------+-----------+-----------+
12 Related Parties
Entities with Joint Control or Significant Influence
WA Developments International Limited is owned by A Tinkler and W Stobart. The
Group made purchases totalling GBP36,953 from and sales totalling GBP158,784 to
WA Developments International Limited. GBP277,185 was due from WA Developments
International Limited at the period end.
Stobart Air Limited was a subsidiary of W A Developments International Limited.
On 31 May 2009, Stobart Air Limited was acquired by the Group and the balance
owed by Stobart Air Limited was repaid (see note 3).
During the period and prior to acquisition, the Group made sales of GBP5,499 to
Stobart Air Limited. GBPnil was outstanding owed by Stobart Air Limited at the
period end.
AstSigns Limited is 27% owned by W Stobart. During the period, the Group made
purchases of GBP160,801 from AstSigns Limited of which GBP38,897 was outstanding
owed by the Group at the period end.
Joint Ventures
The Group had loans outstanding from its joint venture interest, Starion
Tottenham Court Road Limited of GBP2,110,000 at the period end.
The Group had loans outstanding from its joint venture interest, Ropewalks One
LLP of GBP152,000 at the period end.
The Group received a dividend of GBP62,500 from Westbury Fitness Hull Limited.
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 2009 which comprise the Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated Statement of Financial Position,
Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement
and the related notes 1 to 12. 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 guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
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 Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
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 United Kingdom. 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 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Ernst & Young LLP
Manchester
22 October 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
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