TIDMSTOB
RNS Number : 6633U
Stobart Group Limited
20 October 2010
Stobart Group Limited
Interim Results for the six months ended 31 August 2010
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, and supply of biomass products.
Financial Highlights
-- Revenue from continuing operations up 11.7% to GBP243.7m
(2009: GBP218.2m)
-- Earnings after fleet financing costs (underlying EAFFC*) up
25.9% to GBP17.0m (2009: GBP13.5m)
-- Normalised profit before tax** from continuing activities up
24.2% to GBP15.4m (2009: GBP12.4m)
-- Profit before tax up 38.7% to GBP15.4m (2009: GBP11.1m)
-- Earnings per share from continuing operations (normalised
before restructuring costs and allowing for a 28% tax charge) up
16.2% to 4.3p (2009: 3.7p)
-- Interim dividend of 2.0p (2009: 2.0p) per share payable on 10
December 2010
-- Net cash generated from operations of GBP13.6m (2009:
GBP19.7m)
* Underlying EAFFC comprises the underlying operating profit of
GBP18.9m (2009: GBP15.8m) less fleet financing costs of GBP1.4m
(2009: GBP1.9m) and share based payments of GBP0.5m (2009:
GBP0.4m).
**PBT before restructuring costs of GBPnil (2009: GBP1.3m).
Operational Highlights
-- Eddie Stobart commences several significant new
agreements:
- new GBP25m per annum chilled distribution business for
Tesco
- additional agreement with Britvic increasing business
- new GBP7m per annum contract with A G Barr
- new EUR18m per annum business with Tesco Ballymun,
Ireland.
-- Major contract renewals in Eddie Stobart for Procter &
Gamble, Gerber Knauf and Crown.
-- GBP30m investment in a 50% interest in Stobart Biomass
Products Limited in March 2010 and further GBP1m invested to enable
that venture to acquire the business of Amenity Horticultural
Services Limited in July 2010.
-- New railway station and control tower at London Southend
Airport near completion with advanced discussions ongoing with
interested airlines including Aer Arann with whom we have agreed a
conditional five year operating agreement with volumes expected to
grow to 300,000 passengers per annum.
-- Securing of GBP100m 10 year development finance with M&G
UK Companies Financing Fund.
Andrew Tinkler, Chief Executive, comments:
"We have again shown strong growth and resilience in the
business with underlying profits up 24%. Eddie Stobart has
performed particularly well after contract wins with Tesco, A G
Barr and others which have added volume and margin and there is
further growth to come from these contracts. Changes in the way our
customers operate have provided challenges to us which we are
addressing. In particular we have faced shorter lead times and
volatility in volumes. In the long term we are well placed to take
advantage of these changes in the market.
"Exciting developments include the biomass link-up with A. W.
Jenkinson Forest Products, the major improvements at London
Southend Airport and agreement with Aer Arann. We are talking to
other significant potential customers in both of these
businesses.
"We have slightly reduced our full year profit expectations as a
result of reduced spend by Network Rail and increased overall
finance costs. We are also cautious that 2011 may see volumes
affected by the increase in VAT rate and the Government spending
review. However, in the long term we see this as positive for the
economy and our business. Overall, we look forward to further
growth in the second half as new contracts fully contribute. Our
efficient green fleets and innovative transport solutions continue
to impress customers and our improved assets give excellent
opportunities for adding value."
20 October 2010
ENQUIRIES:
Stobart Group Tel: 01925 605400
Andrew Tinkler, Chief Executive
Officer
Ben Whawell, Chief Financial
Officer
i-nfluence Tel: 020 7287 9610
Stuart Dyble
James Andrew
Britt Keay
CHAIRMAN'S Statement
Overview
Stobart Group recently completed three full years as a listed
company and I am pleased to be able to report on another period of
further progress and increased profitability. Turnover has more
than doubled over the three year period and profitability has
increased significantly in each reporting period on a like for like
basis despite the economic recession in the middle of this
period.
In the first six months of the financial year, the Eddie Stobart
business has grown organically as the business model and
improvements in technology provide efficiencies for customers. We
have made a strategic investment in a joint venture with A. W.
Jenkinson Forest Products which puts us in a strong position in the
emerging Biomass market. Macro-economic conditions and Network Rail
expenditure have adversely affected volumes at Stobart Rail but due
to successful management of costs, profitability has been partly
protected and Stobart Rail also continues to help to develop major
assets around the Group. There have been steady year-on-year
volumes at Stobart Ports and the development of London Southend
Airport is progressing well with the near-completion of the railway
station and new control tower.
Andrew Tinkler covers the divisional performance and strategy in
further detail in the Chief Executive's Review.
Results
Total revenue for the period from continuing operations was
GBP243.7m (2009: GBP218.2m), producing earnings after fleet
financing costs (EAFFC) of GBP17.0m (2009: GBP13.5m) and normalised
profit before taxation of GBP15.4m (2009: GBP12.4m before tax and
restructuring costs). Statutory profit before tax was GBP15.4m
(2009: GBP11.1m). Earnings per share from continuing operations
(normalised before restructuring costs and allowing for a 28% tax
charge) was 4.3p (2009: 3.7p).
Dividend
The Board has declared an interim dividend of 2.0p, which will
be paid on 10 December 2010 to shareholders on the register as at
12 November 2010. This reflects our confidence in continued strong
performance from our proven business model.
Income Shares
During the period the Income Shares were fully converted to
ordinary shares or redeemed at par. There are no Income Shares
remaining in issue.
People
There have been no changes to the Board of Directors or in
senior management in the half-year period or to date.
Outlook
There will be further growth from the full delivery of the
business recently announced. We also have strong opportunities to
develop new customer relationships and contracts especially in the
biomass business and Stobart Air division but profitability in
Stobart Rail will continue to be affected by factors to some extent
outside of our control.
The Board looks forward to reporting on further progress,
including a good second half, giving a result for the year as a
whole that will be towards the bottom end of our current
expectations.
RODNEY BAKER-BATES
Chairman
20 October 2010
CHIEF EXECUTIVE'S REVIEW
Results
I am pleased to announce another strong set of results for the
six months to 31 August 2010 with organic growth in the business
and development of some exciting new opportunities.
6 months 6 months
to 31 August to 31 August
2010 2009
Total revenue from continuing operations GBP243.7m GBP218.2m
Earnings after fleet financing GBP17.0m GBP13.5m
costs (EAFFC) *
Normalised profit before tax and GBP15.4m GBP12.4m
restructuring costs (2009 only)
Statutory profit before tax GBP15.4m GBP11.1m
-------------- --------------
EPS from continuing activities 4.6p 3.8p
Normalised EPS (before restructuring 4.3p 3.7p
costs (2009 only) and allowing
for a 28% tax charge)
-------------- --------------
*EAFFC comprises the underlying operating profit of GBP18.9m
(2009: GBP15.8m) less share based payments of GBP0.5m (2009:
GBP0.4m) the fleet financing costs of GBP1.4m (2009: GBP1.9m).
The Group maintains a strong balance sheet, with net assets of
GBP324.6m (28 February 2010: GBP305.4m). Non fleet-related net
borrowing at GBP86.8m (28 February 2010: GBP46.4m) increased
principally due to consideration for biomass related investments of
GBP16.0m and development of assets, principally development at
Southend Airport. Fleet related borrowing increased to GBP75.2m (28
February 2010: GBP50.4m) due to an increase in asset backed finance
leases on vehicles replacing over 300 vehicles which were
previously on operating leases. Cash (net) generated from
operations was GBP14.0m (31 August 2009: GBP19.4m) and net cash
outflow was GBP4.2m (31 August 2009: GBP3.3m) after dividends paid.
Operating cash flow has been affected by a volume related increase
in working capital and a small increase in debtor days caused by
customer mix. Gearing, excluding fleet financing and related
assets, was 26.7% (28 February 2010: 15.2%).
The effective tax rate for the period is 23.9%. This rate is
lower than the standard rate of 28% principally due to the effect
on the deferred tax balance of the expected reduction in the UK
corporation tax rate from 28% to 27% from 1 April 2011.
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. We are able to offer customers innovative, flexible and
environmentally friendly logistics solutions.
Our strategy is underpinned by our brand, people, systems and
multimodal service offering.
Our brand
We have been ranked highly in the Business Superbrands listings
for the past few years and our brand is well known and recognised
for clean, quality services and for doing things right.
We are looking to protect this asset by confirming and
collecting all of our trademarks and designs into one entity and
controlling and capitalising further on their use.
All of our divisions share the Stobart brand and this is
valuable in attracting new customers.
Our people
We have a very experienced and motivated management team and a
hard-working and loyal staff.
We are committed to training to maintain high standards of work
and safety. We have recently introduced a firm-wide management
development programme.
During the period we launched an employee reward scheme which
offers discounts on high street vouchers. This is open to all
employees.
Our systems and technology
We have developed and implemented several industry-leading
systems and technologies. Our vehicle tracking and driver
monitoring systems are leading edge and enable us to run a more
efficient fleet than our competitors and therefore offer very
competitive rates to customers.
Our fleet of trucks is the most modern large fleet on the road.
Our newer warehouses contain state-of-the-art organisational
systems.
Our Multimodal Service Offering
Stobart Group owns several major freehold assets including major
Port sites at Widnes and Runcorn, airports at London Southend and
Carlisle and several operational depots.
Our current multimodal portfolio includes the following assets
and services:
-- 1,850 trucks with utilisation rates at one of the highest
levels in the industry
-- Chilled, bulk and international fleets with high technology
fleet management
-- Operations at 50 locations in the UK and Europe
-- 6m sq. ft. of warehousing
-- Successful inland rail freight terminal which receives 6
trains per day
-- 5 rail freight services in partnership with customers
including European links
-- Two operational airports, with significant development
potential to increase activity
-- Waterway port opportunity for development in the medium
term
We have a large customer base, multimodal capability, high
quality brand people and systems in place to protect us against
financial and operational risk.
Funding capital developments
In June we announced a GBP100m, 10 year loan facility with
M&G Investments. At the same time, the Group repaid all of its
term loans, loan notes and income shares. This loan facility will
be used to strategically develop the assets in the Group - the
current major project being the development of London Southend
Airport. This gives the Group the availability of a significant
level of funds over a long term and replaced the previous
development funding which was coming to the end of its term. This
carries a higher rate of interest than the previous loan but will
eliminate the fees and management costs of refinancing in the
medium term.
Environment
Environmental sustainability is an increasingly important factor
on the agenda of customers and other stakeholders such as business
partners, investors and the Government.
An ongoing key element of our strategy is the focus it brings to
providing environmental improvements. By the end of the year we
expect to disclose a measure of overall CO2 emissions for the
business.
Sustainability is a key driver in everything we do and we are
working hard to eliminate waste through filling up empty journeys
and considering other more environmentally friendly modes of
transport.
Our Eddie Stobart road fleet runs with a utilisation rate of
82.9% meaning that only 17.1% of vehicles are travelling without a
load. Our utilisation rate is considerably higher than the industry
average and is due to our national network and industry-leading
vehicle monitoring technologies.
The proportion of our trucks which are Euro 4/5 compliant is
89.9%. These engines emit a much lower level of damaging
particulates than older trucks.
We have introduced a driver incentive scheme which directly
rewards drivers for performance each day against targets for engine
idle time, engine revs, harsh braking and use of cruise control.
All of these measures are designed to reduce the environmental
impact of the fleet as well as improve fuel consumption and
profitability.
Load fill in the chilled division has increased by 2% to 78% in
the period reducing the empty space in trailers in that operation.
The refrigerated trailers used by our chilled fleet are 100%
recyclable.
The Rugby to Mossend rail freight service is now pulled using an
electric traction locomotive. This offers a faster service and
emits 30% less CO2 than diesel traction.
All water used in the truck washes is recycled.
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 1,850 trucks and 3,000
trailers and around 6 million square feet of warehousing across 40
sites in the UK and Ireland.
Revenue for the Eddie Stobart division was GBP219.0m (2009:
GBP188.7m) and divisional EAFFC was GBP16.4m (2009: GBP12.0m).
UK transport
The UK transport operation now runs around 1,200 trucks and
3,000 trailers from common systems and processes. Vehicle
utilisation in the period to 31 August 2010 was 82.9% (year to 28
February 2009: 83.5%), a slight reduction from the year end due to
the integration of new contracts and the issues highlighted below
though this has been improving over the period.
We are now operating the GBP20m Unilever contract at full volume
and the GBP7m A G Barr contract has been building volume through
the period. In addition, we recently announced significant new
business with Britvic.
During the period we have experienced some challenges in running
the fleet. Customer lead times have shortened and their forecasting
has become less accurate whilst their targets remain demanding.
This has caused a drop in our truck utilisation rate. We have taken
action to address these issues. In some cases we have been able to
increase rates for shorter lead times and in others to adjust the
performance requirement to allow us to maintain utilisation. We
continue to work closely with customers to address these
issues.
We have introduced SAFED monitoring technology and driver
incentives across the whole of the UK fleet aimed at further
enhancing our drivers' existing high driving standards.
Chilled transport
Chilled transport comprises a fleet of over 350 trucks operating
from 6 locations in the UK. The chilled transport business has
performed better than expected during the period as a result of
additional growth and cost control. This performance is expected to
continue to improve further into the second half of the year as new
contracts are introduced.
Organic growth has been achieved with the main customers as well
as developing new relationships. Pallet loadfill for the first half
increased from 76% to 78%.
The business was awarded the Tesco Widnes chilled transport
contract earlier in the year. This represents a significant
achievement for the division and is the first chilled distribution
centre operated by the business. Volume has been successfully
migrated from other sites and the site is now operating at full
capacity. This site will add around 30% to the business'
revenue.
The Stobart brand is now established with Stobart now seen as a
key provider in the chilled market place after only two years from
our entry through the acquisition of part of Innovate Logistics.
Management believe that there are further opportunities in the
sector for revenue growth.
Environmental transport
During the period, the business entered in to a major new
transport contract with A. W. Jenkinson Forest Products which
involves over 60 vehicles and gives a positive step-change in the
business. The remaining fleet of around 20 vehicles continue to
transport bio-waste and recycled products to customers throughout
the UK. Vehicle utilisation in the period was 81% representing a
significant increase on the prior period. We have also recently
secured rate increases with customers.
International transport
International transport comprises a fleet of around 90 vehicles
operating in Europe. The performance in International transport is
encouraging with performance significantly ahead of prior year.
Overheads have been reduced through an ongoing cost reduction
programme saving around 10% annually. We have retained our existing
customer base despite increasingly difficult trading conditions and
price pressure. We have also secured new contracts which will
commence in the second half.
We continue to focus on niche activities including our
involvement in the Formula One and Rally circuits which represents
a significant area of growth for International transport.
Ireland
The increase in the Stobart presence in Southern and Northern
Ireland, coupled with Ireland's emergence as one of Europe's
leading manufacturers and exporters of pharmaceuticals and dairy
products has resulted in significant growth in business and allows
for significant opportunity for the Group. The growth has been
underpinned by the awarding of the Tesco Donabate ambient
distribution contract along with significant contract wins with
Coca Cola and Unilever. We can also announce that we have recently
been awarded business for chilled transport at Tesco Ballymun worth
EUR18m per annum.
The dedicated management team, current fleet of around 80
vehicles and warehousing facilities, which operate to the same
exacting standards as the rest of the Stobart Group, are all
ideally based within the Dublin port facility. Stobart Ireland can
offer a one-stop shop service alleviating the traditional issues of
inconsistency across international movements.
Warehousing
The warehousing division operates from a network of high spec
facilities managing a portfolio of blue chip clients with the
pharmaceuticals, FMCG drinks and health and beauty sectors. The
services on offer range from case/pallet pick through to
value-adding services such as co-packing, process management and
direct to consumer order handling.
A solid first half performance has been complemented by
retention of several key contracts and successful implementation of
new business wins from the prior year. Johnson and Johnson have
been migrated in to our new Daresbury facility and we have added
further new contracts including A G Barr in Crick. These
developments should allow the warehousing business to continue to
grow revenue and margins.
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,
permanent way works and other civil works. The freight division
operates a growing number of freight trains each week to complement
our road haulage business. Both businesses have an excellent record
for safety.
Revenue for the Stobart Rail division was GBP26.3m (2009:
GBP30.0m) and divisional EAFFC was GBP1.9m (2009: GBP2.3m).
Work on rail infrastructure has been depressed due to cutbacks
in expenditure by Network Rail and other major clients with cost
savings and budget constraints imposed by the Office of Rail
Regulator. This has caused some smaller competitors to drop out of
the rail market. Reduced Network Rail expenditure has affected
profitability in Stobart Rail and in the near future the market is
forecast to remain depressed. In order to mitigate the financial
impact of this, strict cost control measures have been implemented
within Stobart Rail and we believe that the market will recover but
the timescale is difficult to predict.
The engineering business has played a major part in the
construction of the railway station and control tower at London
Southend Airport. Both projects are nearing completion. Work has
been put on hold at Carlisle Airport following the blocking of the
planning permission. A slightly revised planning application will
be submitted to remove the technical issue responsible for quashing
it. The business is also looking at potential civil engineering
projects work outside the Group, building on its successful
delivery of the Distribution Centre at Widnes. The refurbishment of
the Bardon site as a Distribution Centre for Nestle is nearing its
successful conclusion.
The rail freight business is developing and more of Eddie
Stobart's road transport customers are considering using rail
freight services. In addition, new customers A G Barr and Nestle
Purina are now regularly using our rail freight services. The
outlook for the rail freight business remains positive as key
stakeholders remain committed to environmental impact reductions.
We are talking to one of our largest customers about further rail
freight services.
Stobart Ports
Our ports division comprises two main operations. An inland port
(container handling facility) in Widnes which currently handles
around 100,000 shipping containers a year, and a nearby waterway
port, Port of Weston, in Runcorn. The ports transport fleet
comprises 50 vehicles.
Revenue for the Stobart Ports division was GBP7.0m (2009:
GBP6.3m) and divisional EAFFC was GBP1.0m (2009: GBP1.5m being
higher as the terminal site was owned and so there are no site
rental costs but there would have been a significant interest cost
on the GBP25m of associated debt).
The container terminal in Widnes was the subject of a sale and
lease back arrangement from the end of the previous year. The
division still owns around 100 acres of development land around the
Widnes container facility and talks have taken place with a blue
chip customer requiring additional warehousing space in the
area.
Eddie Stobart's Chilled transport has transferred its
administration centre to Widnes following the securing of the
transport contract at the new Tesco chilled distribution centre
which Stobart Group developed and sold at the end of the previous
year. The relocation has already provided synergies, with Stobart
Ports and Eddie Stobart Chilled transport working in partnership
distributing temperature controlled freight from the Widnes chilled
warehouse. It is envisaged that more efficiency savings will take
place within the year. The Stobart Ports vehicle fleet is being
updated to a Stobart branded green livery and Euro 4/5 compliant
giving reduced vehicle emissions. Access to the group-wide GTS and
Isotrack vehicle route planning systems will allow traffic planners
to monitor together all Stobart's fleets, enabling deliveries to be
planned more effectively increasing vehicle utilisation and improve
profitability.
The inland port's container movements for the first 6 months
remained steady at a similar level to the prior year and continue
to be affected by the economic climate reflected in general import
volumes. The new train service from Pomezia in Italy has been
successfully trialled and will enable the customer to transport its
health and beauty product almost directly by rail to its UK
Distribution centre. A new potential train service from Southampton
could also provide the division with extra lifting and storage
revenue.
The Inland transport business has performed in excess of
expectations through the first 6 months of the year. Additional
contracted work has enabled the transport operation to increase its
truck numbers and replace its older trailers.
All the major contracts have been retained and additional long
term agreements are in place to service blue chip customers through
the Shipping Lines. The division continues to look to develop more
business partnerships.
The waterways port is a 44 acre site on the Manchester Ship
Canal and has excellent potential for development with close road,
rail and waterway links. Transport by ship of bulk products could
be an excellent fit with the emerging biomass business. Revenue is
currently being generated from using the land as outside storage
space and rental income from warehouses it owns.
Stobart Air
Stobart Air has traded in line with expectations in the first
half. The air division comprises London Southend Airport and
Carlisle Lake District Airport.
Revenue for the Stobart Air division was GBP3.6m (2009: GBP3.2m)
and divisional EAFFC was GBP0.1m (2009: GBP0.0m).
At London Southend Airport, the major development programme has
progressed well with the completion of the construction phase of
the air traffic control tower and railway station providing train
services to Stratford, the site of the Olympics, and to London
Liverpool Street in 49 minutes. Subject to commissioning, we expect
that the station and tower will open in December 2010 (already
completed but awaiting opening for timetable reasons) and early
2011 respectively. We have received planning approval for an
extended runway and the project is expected to complete by the end
of 2011 and in advance of the Olympic Games. Positive discussions
are ongoing with interested passenger airlines.
We have agreed terms for a five year operating agreement with
Aer Arann to use London Southend Airport, for flights starting in
March 2011, with volumes expected to grow to 300,000 passengers
annually. As part of the overall investment agreement with others,
Stobart Group will invest EUR2.5 million to incentivise and market
Aer Arann's operation from London Southend Airport. The offer
remains conditional on certain terms being satisfied; including Aer
Arann successfully exiting Examinership; which should be by the end
of October.
The association with Aer Arann, which is a household name in
Ireland, would further strengthen and develop Stobart's position in
the Irish market which has grown from no presence to revenues of
EUR40m in two years. Stobart Group is receiving a growing number of
enquiries from customers for airfreight services and alignment with
Aer Arann offers potential to explore opportunities in the
future.
London Southend Airport was recently awarded the European
Regions Airline Association Airport Achievement Award 2010/11.
The review of the operational cost structure at Carlisle Airport
has been implemented. During the period, the planning application
for utilisation of part of the airport site for a purpose built
transport and warehousing facility was rejected by judicial review.
An amended application dealing with the issues raised in the
judicial review has been prepared for submission.
Stobart Biomass
In March the Group invested GBP15m cash and GBP15m shares in a
50% interest in Stobart Biomass Products Limited. This company is a
joint venture between Stobart Group and A. W. Jenkinson Forest
Products.
In July, Stobart Biomass Products Limited acquired for GBP2m
certain parts of the business and assets of Amenity Horticultural
Services Limited, a leading UK manufacturer and supplier of
Woodchip Biomass fuel for renewable heat to commercial and domestic
users. Stobart Group Limited loaned GBP1m to Stobart Biomass
Products Limited to part fund this investment and this amount has
been included in investments in joint venture in the statement of
financial position. This business represents contracts for over
150,000 tonnes per year of biomass supply to the rapidly growing
renewable heat market, and provides Stobart Biomass with a leading
position in a new market. Thanks to progressive corporate policies
and Governmental support, this is a market at the tipping point of
massive potential growth, and the acquisition of AHS positions
Stobart Biomass to grow strategically with the sector.
We are in discussions with several potential customers for
supply and transport of Biomass products and the pipeline is very
encouraging.
Discontinued activities
As at the previous year end, certain investment properties,
including One Plantation Place, are classified as held-for-sale and
included in discontinued operations as they are non-core business
assets and part of a co-ordinated disposal plan. The Group has been
unable to sell these assets in the period due to the fall in the
commercial property market and the difficulty in co-ordinating
joint venture partners for a disposal of the assets. We continue to
look for opportunities to sell these assets on reasonable
commercial terms, and expect to sell them in the next 12 months.
These property assets are all written down to nil in the statement
of financial position. The commercial property market is showing
signs of stabilising.
Outlook
The second half has started encouragingly and we expect to see
good growth across our businesses. New and recently announced
agreements mentioned above will support second half performance. In
addition, we are in discussion with several other major customers
including biomass customers and airlines which should significantly
grow the business.
We have slightly reduced our full year profit expectations as a
result of reduced spend by Network Rail and increased overall
finance costs. We are also cautious that 2011 may see volumes
affected by the increase in VAT rate and the Government spending
review. However, in the long term we see this as positive for the
economy and our business. Overall, we look forward to further
growth in the second half as new contracts fully contribute. Our
efficient green fleets and innovative transport solutions continue
to impress customers and our improved assets give excellent
opportunities for adding value in to the future.
ANDREW TINKLER
Chief Executive
20 October 2010
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
-- Information technology
-- Airport safety and security
-- Demand for integrated and outsourced transport and
logistics
-- People management
-- Competition
-- Nature of lease obligations
-- Fuel prices
-- Commercial property
-- Acquisitions
-- Capital expenditure
-- Development of the UK biomass market
-- Securing of biomass business
For greater detail on these risks and mitigating factors, please
refer to our 2010 Annual Report.
Going concern
The directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the interim financial statements
have been prepared on a going concern basis.
Directors' responsibility statement
The Board confirms to the best of its knowledge:
-- that the consolidated half year financial statements for the
six months to 31 August 2010 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 20 October 2010.
For and on behalf of the Board
BEN WHAWELL
Chief Financial Officer
20 October 2010 Interim Consolidated Income Statement For the
six months ended 31 August 2010
Six months Six months
ended 31 ended 31 Year ended
August August 28 February
2010 2009 2010
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Revenue 4 243,689 218,245 447,661
----------- ----------- -------------
Operating expenses -
underlying (224,805) (202,438) (412,642)
Underlying operating profit 18,884 15,807 35,019
Share based payment (480) (423) (2,504)
Less: share based payments
associated with the
disposal of Widnes assets - - 1,758
----------------------------- ------ ----------- ----------- -------------
Share based payments on
underlying operating
profit (480) (423) (746)
Profit on disposal of Widnes
assets (net of associated
costs) - - 8,258
Restructuring costs - (1,306) (2,746)
Profit before interest and
tax 18,404 14,078 39,785
Finance costs (3,305) (3,445) (6,650)
Finance income 284 442 928
Profit before tax 15,383 11,075 34,063
Income tax 5 (3,682) (2,139) (5,071)
Profit for the period from
continuing operations 11,701 8,936 28,992
Discontinued operations (7) (416) (770)
Profit for the period
attributable to equity
holders of the parent 11,694 8,520 28,222
----------- ----------- -------------
Earnings per ordinary share 7
From continuing operations
Basic 4.57p 3.75p 12.06p
Diluted 4.56p 3.73p 11.89p
----------- ----------- -------------
From continuing and
discontinued operations
Basic 4.57p 3.58p 11.74p
Diluted 4.56p 3.56p 11.58p
----------- ----------- -------------
Interim Consolidated Statement of Comprehensive Income For the six months ended 31 August 2010
Six months Six months
ended 31 ended 31 Year ended
August August 28 February
2010 2009 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period 11,694 8,520 28,222
Exchange differences on translation
of foreign operations (249) - -
Cash flow hedge (890) - (1,608)
Tax on items relating to components
of other comprehensive income 249 - 450
Other comprehensive income /
(loss) for the period, net of
tax (890) - (1,158)
Total comprehensive income for the
period, net of tax, attributable to
equity holders of the parent 10,804 8,520 27,064
----------- ----------- -------------
Interim Consolidated Statement of Financial Position As at 31 August 2010
31 August 28 February
2010 2010
Unaudited Audited
Notes GBP'000 GBP'000
Non-current Assets
Property, plant and equipment
- Land and buildings 8 153,648 139,705
- Plant and machinery 8 16,087 15,835
- Fixtures, fittings and equipment 8 4,103 4,131
- Commercial vehicles 8 77,194 51,234
---------- ------------
251,032 210,905
Investment in joint venture 31,000 -
Investment property 2,000 2,000
Intangible assets 231,284 231,286
Other investments 6 10
515,322 444,201
---------- ------------
Current Assets
Inventories 1,701 1,559
Trade and other receivables 103,045 84,411
Cash and cash equivalents 9 5,727 13,134
---------- ------------
110,473 99,104
Assets of disposal groups classified
as held for sale 256 241
---------- ------------
110,729 99,345
---------- ------------
Total Assets 626,051 543,546
---------- ------------
Non-current Liabilities
Loans and borrowings 9 115,358 42,876
Other liabilities 12,579 10,941
Corporation tax 4,774 4,807
Deferred tax 34,286 34,243
---------- ------------
166,997 92,867
---------- ------------
Current Liabilities
Trade and other payables 74,923 74,204
Loans and borrowings 9 52,619 67,196
Corporation tax 3,243 -
---------- ------------
130,785 141,400
---------- ------------
Liabilities directly associated
with the assets classified as held
for sale 3,628 3,923
134,413 145,323
---------- ------------
Total Liabilities 301,410 238,190
---------- ------------
Net Assets 324,641 305,356
========== ============
Interim Consolidated Statement of Financial Position (continued) As at 31 August 2010
31 August 28 February
2010 2010
Unaudited Audited
GBP'000 GBP'000
Capital and reserves
Issued share capital 26,516 25,079
Share premium 181,173 164,255
Foreign currency exchange reserve (717) (468)
Reserve for own shares held by
EBT (663) (803)
Hedge reserve (1,799) (1,158)
Retained earnings 120,131 118,451
---------- ------------
Total Equity 324,641 305,356
========== ============
Interim Consolidated Statement of Changes in Equity For the six months ended 31 August 2010
Attributable to equity holders of the parent
Reserve
Foreign for own
Issued currency shares
share Share exchange held by Hedge Retained Total
capital premium reserve EBT reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- -------- -------- --------- ---------
Balance at 1
March 2010 25,079 164,255 (468) (803) (1,158) 118,451 305,356
Profit for the
period - - - - - 11,694 11,694
Other
comprehensive
income /
(loss) - - (249) - (641) - (890)
--------------- -------- -------- --------- -------- -------- --------- ---------
Total
comprehensive
income/(loss) - - (249) - (641) 11,694 10,804
Proceeds on
share issue 1,437 17,190 - - - - 18,627
EBT shares
vested - - - 140 - - 140
Share issue
costs - (272) - - - - (272)
Share based
payment
credit - - - - - 480 480
Tax on share
based
payment - - - - - 113 113
Dividends - - - - - (10,607) (10,607)
Balance at 31
August 2010 26,516 181,173 (717) (663) (1,799) 120,131 324,641
--------------- -------- -------- --------- -------- -------- --------- ---------
Attributable to equity holders of the
parent
Reserve
Foreign for own
Issued currency shares
share Share exchange held Retained Total
capital premium reserve by EBT earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- --------- --------- --------
Balance at 1
March 2009 24,175 155,805 (468) (803) 100,521 279,230
Profit for the
period - - - - 8,520 8,520
Other
comprehensive
income - - - - - -
--------------- -------- -------- --------- --------- --------- --------
Total
comprehensive
income - - - - 8,520 8,520
Proceeds on
share issue 904 8,703 - - - 9,607
Share based
payment
credit - - - - 431 431
Dividends - - - - (7,978) (7,978)
Balance at 31
August 2009 25,079 164,508 (468) (803) 101,494 289,810
--------------- -------- -------- --------- --------- --------- --------
Interim Consolidated Statement of Changes in Equity For the six months ended 31 August 2010
Attributable to equity holders of the parent
Reserve
Foreign for own
Issued currency shares
share Share exchange held by Hedge Retained Total
capital premium reserve EBT reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- -------- -------- --------- ---------
Balance at 1
March 2009 24,175 155,805 (468) (803) - 100,521 279,230
Profit for the
year - - - - - 28,222 28,222
Other
comprehensive
income /
(loss) - - - - (1,158) - (1,158)
--------------- -------- -------- --------- -------- -------- --------- ---------
Total
comprehensive
income/(loss) - - - - (1,158) 28,222 27,064
Proceeds on
share issue 904 8,703 - - - - 9,607
Share issue
costs - (253) - - - - (253)
Share based
payment
credit - - - - - 2,262 2,262
Tax on share
based
payment - - - - - 439 439
Dividends - - - - - (12,993) (12,993)
Balance at 28
February
2010 25,079 164,255 (468) (803) (1,158) 118,451 305,356
--------------- -------- -------- --------- -------- -------- --------- ---------
Interim Consolidated Cash Flow Statement For the six months ended 31 August 2010
Six months Six months
ended 31 ended 31 Year ended
August August 28 February
2010 2009 2010
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Cash generated from
operations 10 13,569 19,703 39,823
Income taxes received
/ (paid) 411 (314) (2,384)
----------- ----------- -------------
Net cash flow from operating
activities 13,980 19,389 37,439
Acquisition of subsidiaries
and other businesses -
net cash paid - (414) (240)
Purchase of property,
plant and equipment (51,382) (45,851) (63,250)
Investment in joint venture (15,000) - -
Proceeds from sale of
property, plant and
equipment 2,649 8,306 72,807
Vat outflow in relation
to disposal of Widnes
assets (4,200) - -
Dividends received from
joint ventures - 63 256
Net loans (advanced to)/
repaid by joint ventures (1,000) 360 545
Interest received 284 442 928
Net cash flow from investing
activities (68,649) (37,094) 11,046
Issue of ordinary shares
less costs of issue (270) - (253)
Repayment of Income Shares (1,644) - -
Dividend paid on ordinary
shares (10,607) (7,978) (12,993)
Proceeds from new finance
leases 33,674 10,754 17,683
Repayment of capital element
of finance leases (8,910) (12,709) (20,672)
Proceeds from new borrowings
less costs of issue 84,087 34,460 34,000
Repayment of borrowings (42,589) (6,258) (63,574)
Interest paid (3,320) (3,838) (6,685)
Net cash flow from financing
activities 50,421 14,431 (52,494)
Decrease in cash and cash
equivalents (4,248) (3,274) (4,009)
Cash and cash equivalents
at beginning of period (13,123) (9,114) (9,114)
----------- ----------- -------------
Cash and cash equivalents
at end of period (17,371) (12,388) (13,123)
----------- ----------- -------------
Cash
- continuing 5,727 8,762 13,134
- included in disposal
group 251 28 179
Overdraft (23,349) (21,178) (26,436)
Cash and cash equivalents
at end of period (17,371) (12,388) (13,123)
--------- --------- ---------
1 Accounting policies of Stobart Group Limited
Corporate information
The interim consolidated financial statements of the Group for
the six months ended 31 August 2010 were authorised for issue in
accordance with a resolution of the directors on 20 October
2010.
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 2010 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 2010. Except for the
28 February 2010 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 2010 but have
been derived from the accounts. Statutory accounts for the period
ended 28 February 2010 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 2010 except for the adoption
of new Standards and Interpretations as of 1 March 2010 which are
applicable to the group, as noted below: Revised IFRS 3 Business
Combinations
This amendment changes the treatment of acquisition-related
costs and contingent consideration relating to acquisitions after 1
January 2010 and also changes the treatment of non-controlling
interests (formerly minority interests) with an option to recognise
these at full fair value as at the acquisition date and a
requirement for previously held non-controlling interests to be
fair valued as at the date control is obtained, with gains and
losses recognised in the income statement.
Some of the key features of the revised IFRS3 include:
- Acquisition-related costs to be expensed and not included in
the purchase price; - Contingent consideration to be recognised at
fair value on the acquisition date (with subsequent changes
recognised in the income statement and not as a change to
goodwill); and
- Changes to the accounting treatment of step acquisitions.
Revised IFRS 3 applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after 1 July 2009.
IAS 27R Consolidated and Separate Financial Statements
The revision to this Standard requires the group to attribute
losses to non-controlling interests even if this results in the
non-controlling interest having a deficit balance. This change is
applicable prospectively and the controlling shareholder will not
be able to recover any past losses absorbed under the old rules.
The revision of the Standard had no material effect on the results
for the six months ended 31 August 2010.
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 Acquisitions and Investment in joint venture
Completion of acquisitions in the previous period where the
acquisition accounting was determined only provisionally
Acquisition of Stobart Air Limited
The accounting for the acquisition of Stobart Air Limited was
completed in the period with no further adjustments made.
Investment in Stobart Biomass Products Limited
Investment in joint venture
On 23 March 2010 the group invested GBP15m cash and GBP15m
shares in a 50% interest in Stobart Biomass Products Limited, an
unlisted company based in the United Kingdom, which has been set up
to source and distribute biomass fuels for renewable energy
production in the UK.
Investment in Amenity Horticultural Services Limited
On 15 July 2010, Stobart Biomass Products Limited acquired for
GBP2m certain parts of the business of Amenity Horticultural
Services Limited. The business is a supplier of woodchip biomass
fuel for renewable heat to commercial and domestic users. Stobart
Group Limited loaned GBP1m to Stobart Biomass Products Limited to
part fund this investment and this amount has been included in
investments in joint venture in the statement of financial
position.
4 Segmental information
The operating segments within continuing operations are Eddie
Stobart, Stobart Rail, Stobart Ports and Stobart Air (including air
freight).
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 including air freight.
The Board of Directors is regarded as the Chief Operating
Decision Maker (CODM). The Board monitors the results of its
business units separately for the purposes of making decisions
about resource allocation and performance assessment. The main
segmental profit measure is earnings after fleet financing costs
but before restructuring costs.
The results and assets of the biomass business have been
included in the Eddie Stobart segment as they are not material for
separate disclosure.
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.
The Group has overseas operations in Europe and Ireland which
are not considered material for separate disclosure.
Period ended Adjustments
31 August Eddie Stobart Stobart Stobart and
2010 Stobart Rail Ports Air eliminations Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External 218,989 14,099 7,033 3,568 - 243,689
Internal - 12,159 - - (12,159) -
-------- -------- -------- -------- ------------- --------
Total revenue 218,989 26,258 7,033 3,568 (12,159) 243,689
-------- -------- -------- -------- ------------- --------
Segment profit
(after fleet
financing
costs) 16,444 1,929 1,010 136 (2,547) 16,972
-------- -------- -------- -------- -------------
Restructuring
costs -
Other finance
costs (1,589)
--------
Profit before
tax 15,383
--------
Inter-segment revenues are eliminated on consolidation.
Included in adjustments and eliminations are central costs of
GBP1,939 000 (2009: GBP1,744,000) and intragroup profit of
GBP608,000 (2009: GBP512,000).
Period ended Adjustments
31 August Eddie Stobart Stobart Stobart and
2009 Stobart Rail Ports Air eliminations Group
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
(after fleet
financing
costs) 11,955 2,295 1,491 36 (2,256) 13,521
-------- -------- -------- -------- -------------
Restructuring
costs (1,306)
Other finance
costs (1,140)
--------
Profit before
tax 11,075
--------
Adjustments
Eddie Stobart Stobart Stobart and
Stobart Rail Ports Air eliminations Group
Segment
assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31
August
2010 435,481 21,323 85,647 84,287 (687) 626,051
At 28
February
2010 358,526 24,643 87,571 68,784 4,022 543,546
--------- -------- -------- -------- ------------- --------
5 Taxation
Taxation on profit on ordinary activities
Six months Six months
ended ended Year ended
31 August 31 August 28 February
Tax charged in the income statement 2010 2009 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current income tax:
UK Corporation tax - continuing
operations 2,988 2,378 6,166
- discontinued operations - 31 31
Overseas tax 60 - -
3,048 2,409 6,197
Adjustment in respect of prior
years 193 (1,010) 103
----------- ----------- -------------
Total current tax 3,241 1,399 6,300
----------- ----------- -------------
Deferred tax:
Origination and reversal of
temporary differences 631 771 1,198
Adjustment in respect of prior
years (190) - (2,396)
----------- ----------- -------------
Total deferred tax charge 441 771 (1,198)
----------- ----------- -------------
Total charge in the income
statement 3,682 2,170 5,102
=========== =========== =============
The effective tax rate on continuing operations of 23.9% is
lower than the standard rate of 28% principally due to the impact
on the reduction of the UK corporation tax rate from 28% to 27%
with effect from 1 April 2011. The income tax expense recognised is
based on the estimated full year effective rate for the year to 28
February 2011.
Announcements were made in the Emergency Budget on 22 June 2010
that the following changes to the UK tax legislation would be
enacted in the 2010 and subsequent Finance Acts:
The main rate of corporation tax is to be reduced from 28% to
24% at a rate of 1% per year. Only the first 1% reduction of the
announced 4% reduction in the corporation tax rate has been enacted
or substantively enacted at the balance sheet date. This first
reduction to a rate of 27% will be effective from1 April 2011.
Based on the closing deferred tax liability at the interim
balance sheet date, the aggregate impact of the proposed reductions
from 27% down to 24% would reduce the deferred tax liability by
approximately GBP3.9m. There will be a reduction of approximately
GBP1.3m per year, if only a 1% reduction in the corporation tax
rate is enacted each year.
6 Dividends
A final dividend of 4p per share (2009: 3.3p) totalling
GBP10,606,596 (2009: GBP7,977,629 paid on 22 June 2009) was
declared on 12 May 2010 and was paid on 21 June 2010.
An interim dividend of 2.0p (2009: 2.0p) per share totalling
GBP5,303 298 (2009: GBP5,015,766 paid on 10 December 2009) was
declared on 20 October 2010 and will be paid on 10 December 2010.
This is not recognised as a liability at 31 August 2010.
7 Earnings per share
The following table reflects the income and share data used in
the basic and diluted earnings per share calculations:
Six months Six months Year ended
ended 31 ended 31 28 February
August 2010 August 2009 2010
Unaudited Unaudited Audited
Numerator GBP'000 GBP'000 GBP'000
Continuing operations
Profit used for basic earnings 11,701 8,936 28,992
Effect on earnings of dilutive
potential ordinary shares 27 152 304
------------- ------------- -------------
Diluted earnings 11,728 9,088 29,296
------------- ------------- -------------
Discontinued operations
Profit used for basic earnings (7) (416) (770)
Effect on earnings of dilutive
potential ordinary shares - - -
------------- ------------- -------------
Diluted earnings (7) (416) (770)
------------- ------------- -------------
Total
Profit used for basic earnings 11,694 8,520 28,222
Effect on earnings of dilutive
potential ordinary shares 27 152 304
------------- ------------- -------------
Diluted earnings 11,721 8,672 28,526
------------- ------------- -------------
Denominator Number Number Number
Weighted average number
of shares used in basic
EPS 256,150,406 238,286,604 240,479,372
Effects of convertible Income
Shares 673,574 5,271,678 4,502,013
Effects of employee share
options - - 1,420,000
------------- ------------- -------------
Weighted average number
of shares used in diluted
EPS 256,823,980 243,558,282 246,401,385
------------- ------------- -------------
On 23 March 2010, 11,278,195 Ordinary Shares were issued in
connection with the investment in Stobart Biomass Products Limited
at an effective market price of 133p per share.
On 25 March 2010, 1,395,000 Ordinary Shares were allocated to
directors and employees under the Stobart Executive Equity
Incentive Plan. These increased the weighted average number of
shares used in the basic EPS calculations.
On 9 April 2010, 3,098,440 additional Ordinary Shares were
created on conversion of Income Shares at a rate of 0.854 Ordinary
Shares per Income Share and an effective price of 117p per
share.
The normalised basic earnings per share are 4.3p (31 August
2009: 3.7p, 28 February 2010: 8.6p). The numerator used in
calculating the normalised earnings per share of GBP11,076,000 (31
August 2009: GBP8,914 000, 28 February 2010: GBP20,557,000) is the
profit before tax from continuing operations of GBP15,383,000 (31
August 2009: GBP11,075,000, 28 February 2010: GBP34,063,000) plus
the restructuring costs of GBPnil (31 August 2009: GBP1,306,000, 28
February 2010: GBP2,746,000) less the profit on disposal of Widnes
assets (after costs) of GBPnil (31 August 2009: GBPnil, 28 February
2010: GBP8,258,000)and allowing for tax at 28% of GBP4,307,000 (31
August 2009: GBP3,467,000, 28 February 2010: GBP10 307,000).
8 Property, plant and equipment
Additions and disposals
During the six months ended 31 August 2010, the Group acquired
or developed assets with a cost of GBP51,414,000. This included
development of the railway station and control tower at London
Southend Airport, development at Carlisle Lake District Airport and
commercial vehicles.
Assets with a book value of GBP2,670,000 were disposed of by the
Group during the six months ended 31 August 2010 resulting in a net
profit on disposal of GBP11,000.
Capital commitments
At 31 August 2010, the Group had capital commitments of
GBP14,182,652 (2009: GBP1,602,479) principally relating to tractor
units.
9 Analysis of net debt
31 August 28 February
2010 2010
Unaudited Audited
GBP'000 GBP'000
Loans and borrowings
Non-current
Fixed rate:
- Obligations under finance leases
and hire purchase contracts 46,152 31,509
Variable rate:
- Bank loans 69,206 11,367
115,358 42,876
========== ============
Current
Fixed rate:
- Income shares - 5,269
- Obligations under finance leases
and hire purchase contracts 29,012 18,891
Variable rate borrowings
- Loan notes - 6,000
- Overdrafts 23,349 26,436
- Bank loans 258 10,600
52,619 67,196
========== ============
Total loans and borrowings 167,977 110,072
Cash (5,978) (13,313)
Net debt 161,999 96,759
========== ============
The main increases in net debt have resulted from the following:
(1) funding the development of the railway station and control
tower at London Southend Airport; (2) funding of GBP16m for the
acquisitions of Stobart Biomass Products Limited and of certain
parts of the business of Amenity Horticultural Services Limited;
(3) net increase in financing of vehicles of GBP24.8m to growth of
the fleet.
During the period, the Group refinanced its borrowings. The loan
notes, bank loans and Income Shares were repaid and the Group
entered in to a new 10 year GBP100m development facility with
M&G UK Companies Financing Fund.
During the period 3,628,158 Income Shares were converted to
3,098,440 Ordinary Shares and 1,643,520 Income Shares were redeemed
for GBP1 each. There are no Income Shares remaining in issue.
10 Cash generated from operations
Six months Six months
ended 31 ended 31 Year to
August August 28 February
2010 2009 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit before tax on continuing
operations 15,383 11,075 34,063
Loss before tax on discontinued
operations (7) (385) (739)
----------- ----------- -------------
Profit before tax 15,376 10,690 33,324
Adjustments to reconcile
profit / (loss) before
tax to net cash flows:
Non-cash:
Realised loss/(profit)
on sale of property, plant
and equipment (11) 216 (8,910)
Associates and joint ventures (33) (63) 131
Depreciation of property,
plant and equipment 8,617 8,203 15,668
Investment income (284) (442) (928)
Interest expense 3,305 3,718 6,621
Amortisation of income
share issue costs 2 15 29
Share option charge 480 431 755
Working capital adjustments:
(Increase) / decrease
in inventories (142) 8 188
(Increase) / decrease
in trade and other receivables (19,020) 207 (11,605)
Increase / (decrease)
in trade and other payables 5,279 (3,280) 4,550
Cash generated from operations 13,569 19,703 39,823
----------- ----------- -------------
Issue of ordinary shares
Issue of ordinary shares - - -
Issue costs paid on issuance
of ordinary shares (270) - (253)
----------- ----------- -------------
(270) - (253)
----------- ----------- -------------
11 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 GBP15,929 from and
sales totalling GBP306,383 to WA Developments International
Limited. GBP391 300 was due from WA Developments International
Limited at the period end.
WA Developments International GMBH is a subsidiary of WA
Developments International Limited. The Group made sales totalling
GBP5,181 to WA Developments International GMBH. GBP16,540 was due
from WA Developments International GMBH at the period end.
AstSigns Limited is 27% owned by W Stobart. During the period,
the Group made purchases of GBP174,852 from AstSigns Limited of
which GBP26,809 was outstanding owed by the Group at the period
end.
Moneypenny Limited is a subsidiary of WA Developments
International Limited. The Group made purchases totalling
GBP209,819 and sales totalling GBP3,247 to Moneypenny Limited.
GBP3,248 was due from Moneypenny Limited at the period end.
VLL Limited is 27% owned by A Tinkler and 23% owned by W
Stobart. The Group made sales of GBP41,551 to VLL Limited during
the period. GBP99 470 was due from VLL Limited at the period
end.
Joint Ventures
The Group had loans outstanding from its joint venture interest,
Starion Tottenham Court Road Limited of GBP2,053,000 at the period
end of which GBP2,053,000 has been provided for.
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 2010 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 11. 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 2010 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
20 October 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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