TIDMESKN
RNS Number : 6802M
Esken Limited
25 May 2022
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of domestic law by virtue of the European Union
(Withdrawal) Act 2018.
25 May 2022
Esken Limited
("Esken" or the "Group")
Results for the 12 months ended 28 February 2022
Improving financial performance, well positioned for future
growth
Esken Limited, the Aviation and Renewables Group, today
announces its results for the 12 months to 28 February 2022.
The Group will provide a live presentation relating to its
results via the Investor Meet Company platform at 9:30am BST
today.
The presentation is open to all existing and potential
shareholders. Investors can sign up to Investor Meet Company for
free and add to meet Esken via:
https://www.investormeetcompany.com/esken-limited/register-investor.
Investors who already follow Esken on the Investor Meet Company
platform will automatically be invited.
David Shearer , Executive Chairman of Esken said,
"Our focused strategy for long-term growth is to deliver an
improving financial performance, supported by the post-pandemic
recovery in Esken Renewables and strict cost management in the
Aviation business.
Esken Renewables had a strong year, with profitability and cash
generation significantly improved. The business has a good growth
outlook and is expected to continue its positive trend supported by
long-term index linked contracts and more normalised gate fees.
We are delighted that travel restrictions have been removed and
that easyJet has chosen to fly to three destinations from London
Southend Airport this summer. With the continued support of our
investment partner, we remain in discussions with a number of
airlines for 2023. The airport's attractive operating cost,
passenger experience and ease of access by rail, coupled with the
constraints at the more established London airport bases underpins
the opportunity to secure future airline agreements.
Overall, the Group reported a total loss before tax of GBP34.6m,
which includes GBP20.5m of depreciation, GBP19.0m of net financing
costs and a GBP5.4m net impairment. The Group's headroom at the
year end was GBP72.7m which is ahead of management expectations set
out at the time of the refinancing. While cognisant of
macroeconomic uncertainties, we look ahead with a degree of
confidence as we navigate the recovery phase of the Group ."
Financial highlights
-- Esken's core operating businesses generated a combined
adjusted EBITDA(1) of GBP19.5m (FY21: GBP3.9m).
o Esken Renewables (formerly Stobart Energy) supplied 1.5m
tonnes of biomass fuel, up 4.8% on the prior year (FY21: 1.4m
tonnes). Increased availability of waste wood, improved gate fee
income and more consistent biomass plant customer operations
delivered a 103.0% increase in adjusted EBITDA to GBP20.3m (FY21:
GBP10.0m), marginally ahead of the expected range of GBP18-20m. The
Aviation business reported an adjusted EBITDA loss of GBP0.8m, an
improvement from the GBP6.1m loss in the prior year, as a result of
GBP3.5m of one-off benefits associated with Connect Airways and
Teesside, along with strict financial discipline, and a positive
contribution from Star Handling Services (formally Stobart Aviation
Services), the hotel and solar farm.
-- Esken incurred GBP5.6m of legal costs relating to historical
cases which are still to be concluded , and GBP7.5m of other
central costs including staff costs, tax fees and listing costs.
Esken expects legal costs to reduce significantly in the current
financial year. The Group benefited by GBP4.7m following an
agreement to exit a long-term onerous property lease, leaving the
overall Group adjusted EBITDA at GBP10.3m.
-- The total loss before tax of GBP34.6m is an improvement on
the prior year loss of GBP44.2m. The total loss before tax in the
year under review includes GBP20.5m of depreciation, GBP19.0m of
net financing costs and a GBP5.4m net impairment.
-- During the year, Esken completed a refinancing that included
a GBP125m convertible loan in relation to LSA, together with a new
GBP20m working capital facility and GBP55m equity raise.
-- The Group's headroom(3) at the year end was GBP72.7m (28
February 2021: GBP77.4m) which is ahead of management expectations
set out at the time of the refinancing and includes GBP14.4m of
ring-fenced cash in London Southend Airport (LSA) and the GBP20.0m
undrawn revolving credit facility (RCF). The Group has GBP118.5m
(FY21: GBP91.9m) of net debt(2) excluding obligations under leases
(GBP241.9m (FY21: GBP250.8m) including obligations under leases)
and GBP39.7m of non-core assets, which will be held for sale at the
appropriate time.
-- As at 28 February 2022 the Group has c.GBP47m of future cash
outflows payable through FY23 and FY24 related to ongoing Propius
lease and aircraft-related costs(2) , following the liquidation of
Stobart Air in June 2021. Its current undrawn GBP20m RCF expires in
February 2023. As a result, the Group is progressing a review of
its banking requirements in order to maintain sufficient
headroom(3) to cover its working capital requirements and residual
legacy liabilities.
-- The Group's cash position is tracking in line with management
expectations at the time of the July 2021 capital raise, although
working capital management during the FY22 Financial Year has
resulted in an improved cash position as at the 28 February 2022
year end compared to expectations. The management of costs
associated with Stobart Air, following its liquidation in June
2021, and Propius, and work to dispose of the GBP39.7m portfolio of
non-core assets remain in line with management expectations.
1 Adjusted EBITDA represents profit/(loss) before interest, tax,
depreciation and impairments. Refer to Segmental information note
for reconciliation to statutory loss before tax.
2 See Alternative performance measures note for an explanation
and reconciliation of net debt and Propius lease and
aircraft-related costs.
3 Headroom is the sum of cash plus the GBP20m undrawn revolving
credit facility. See Alternative performance measures note for
further explanation.
Restated
(2)
GBP'm 2022 2021 % change
---------------------------------------------- -------- ---------- ----------
Revenue by division
Aviation 23.4 24.7 (5.3%)
Renewables 79.7 74.7 6.7%
---------------------------------------------- -------- ---------- ----------
Revenue for two core operating divisions 103.1 99.4 3.7%
---------------------------------------------- -------- ---------- ----------
Investments and Non-Strategic infrastructure 0.7 1.1 (36.4%)
Group central and eliminations 0.8 0.9 (11.1%)
---------------------------------------------- -------- ---------- ----------
Total revenue 104.6 101.4 3.2%
---------------------------------------------- -------- ---------- ----------
Adjusted EBITDA(1) by division
Aviation (0.8) (6.1) 86.9%
Renewables 20.3 10.0 103.0%
---------------------------------------------- -------- ---------- ----------
Adjusted EBITDA(1) for two core operating
divisions 19.5 3.9 400.0%
---------------------------------------------- -------- ---------- ----------
Investments and Non-Strategic infrastructure 2.9 (1.6) 281.3%
Group central and eliminations (12.1) (9.7) (24.7%)
---------------------------------------------- -------- ---------- ----------
Total adjusted EBITDA(1) 10.3 (7.4) 239.2%
---------------------------------------------- -------- ---------- ----------
Loss before tax (34.6) (44.2) 21.7%
---------------------------------------------- -------- ---------- ----------
Tax 9.9 7.1 39.4%
Discontinued operations, net of tax (2.4) (118.0) 98.0%
---------------------------------------------- -------- ---------- ----------
Loss for the year (27.1) (155.1) 82.5%
Net debt (241.9) (250.8) 3.6%
Cash and undrawn banking facilities 72.7 77.4 (6.1%)
---------------------------------------------- -------- ---------- ----------
1 Adjusted EBITDA represents profit/(loss) before interest, tax,
depreciation and impairments. Refer to Segmental information note
for reconciliation to statutory loss before tax.
2 2021 results have been restated where required in line with
IFRS 5 Discontinued Operations.
Post period highlights
-- Stobart Energy changed its name to Esken Renewables on 26
April 2022. The change of name, following the sale of the Stobart
brands in 2020, reflects both the business' importance to Esken and
the nature of its operations.
-- Stobart Aviation Services also changed its name to Star
Handling on 24 May 2022 and Stobart Jet Centre changed to London
Southend Jet Centre on 5 April 2022.
-- London Southend Airport saw the return of easyJet operations
under an initial short-term contract, with the airline starting
flights to Malaga, Palma and Faro on 1 May 2022.
ESG progress
-- Esken has for the first time collected and voluntarily
reported initial Scope 3 emissions data, in addition to Scope 1-2
reported in prior years.
o Across its businesses Esken produced 139,447 tCO2e,
representing a 492% increase on the prior year when adjusted to
include Scope 3 data. This increase predominantly relates to the
addition of wider Scope 3 emissions for the Renewables division,
including third party wood handling and transport plus combustion
of biomass fuel by power plant customers.
o Esken Renewables undertook third party research with Logika
Consultants to validate Scope 1-3 emissions data. The research
established that whilst Esken produced around 121,256 tonnes of
Greenhouse Gas (GHG) emissions in FY 22, it saved the UK 630,000
tonnes of additional GHG emissions (equivalent to taking c.136k
cars off the road) by supplying biomass power customers over 1.1
million tonnes of waste wood that would have otherwise gone to
landfill, producing methane.
-- London Southend Airport launched its Connecting Communities
Commitment encompassing the launch of one of the UK's only
independent noise forums, a charitable partnership and various
community engagement initiatives.
-- Esken established charity partnerships for each of its
divisions, and across the business Esken established a good
governance programme which supported its first TCFD submission.
Esken has also put in place an ESG steering group and Board
sub-committee with formal terms of references. As a result of this
governance process, the business has established an ESG risk
register and put in place ESG performance KPIs linked to Executive
Team remuneration.
Outlook
Esken Renewables is continuing its positive trend and Esken
anticipates it will achieve EBITDA in FY23 in excess of GBP22m.
London Southend Airport has secured contracted flying with
easyJet to three destinations: Malaga, Faro and Palma. Whilst Esken
does not at this stage expect to secure any further airline
agreements for Summer 2022, the airport's attractive operating
cost, passenger experience, ease of access by rail, coupled with
capacity constraints at the more established London airport bases,
underpins the opportunity to secure future airline agreements for
Summer 2023 and beyond.
The Group is progressing a review of its banking requirements in
order to maintain sufficient headroom to cover its working capital
requirements and residual legacy liabilities when the existing RCF
expires in February 2023.
Going concern
The Directors' assessment of the going concern position of the
Group is set out in the notes to the extracts from the audited
financial statements in this results announcement. This section
must be read in order to fully understand the significant
judgements the Directors have made and the material uncertainty
that exists in respect of the going concern assumption for the
Group.
Chairman's Statement
I am pleased to present my Chairman's statement for the year to
the end of February 2022. Following on the challenges of the prior
year this has been a year of transition for the Group as we
navigated the pandemic and continued the journey to a focused
renewables and aviation business while continuing to address
residual legacy issues.
Review of the year
We entered the year with continuing uncertainty around the
pandemic and a lack of clarity on the extent of lockdowns and the
impact which these would have on the aviation industry, the
appetite for consumers to travel and the airlines' commitment to
route schedules. Against this backdrop we planned accordingly to
ensure that the Group would have the financial resources to manage
a prolonged downturn while at the same time maintaining the
operational flexibility to respond quickly to any improvement in
demand.
Esken continued on its journey to a focused aviation and
renewables business having exited the loss making Stobart Rail
& Civils business in the prior year. In June 2021 we
unfortunately had to withdraw our support for the Stobart Air
business which was placed in liquidation with the loss of 480 jobs.
We had maintained support for this business since it was
re-acquired in April 2020 following the collapse of Connect
Airways. We tried tirelessly to find a suitable buyer in view of
the significantly better outcome which would have been achieved for
both employees and shareholders given the legacy liabilities.
Sadly, the continuing impact of the pandemic on passenger levels
meant that we could no longer sustain our support without putting
the future viability of the Group at risk. Esken continues to
fulfil its residual lease and related maintenance liabilities on
certain aircraft as these run off through to September 2023.
In July 2021 we announced that agreement had been reached with
Carlyle Global Infrastructure Opportunity Fund (CGI) to invest
GBP125m by way of a convertible loan note into London Southend
Airport (LSA) and this completed in August 2021. At the same time,
we concluded an equity raise of GBP55m and a new GBP20m working
capital facility. This finance raise served two purposes. Firstly,
it secured the funding to enable the Group to meet certain legacy
obligations and provide the working capital to support its
recovery. Secondly and importantly, it introduced an experienced
airport investor and partner into LSA. The convertible loan implied
an equity value on the airport of c.GBP400m in the event of the
conversion option being exercised.
As we simplified the business into two primary divisions we
decided also to streamline the management team, following the
departure of Warwick Brady in the early part of the year. After a
consultation with a number of our major shareholders, we announced
in November 2021 that we would dispense with the role of Group
Chief Executive and would not be seeking to appoint a replacement.
Each of the existing Executive Directors would take main board
responsibility for one of the operating divisions with Nick
Dilworth becoming Executive Director - Renewables and Lewis
Girdwood becoming Executive Director - Aviation. I would remain as
Executive Chairman with overall executive responsibility for the
business while focusing on stakeholder management and the delivery
of the Group Strategy.
We have also made a number of changes within the senior
management team to ensure that we have the right capabilities in
place to drive performance into recovery. These changes will
improve our overall management capability within the Group and will
also make a saving in cost compared with the previous
structure.
During the year the Group continued to make use of the furlough
scheme with a number of colleagues in the Aviation division being
on furlough until 30 September 2021 when that scheme terminated.
The use of this scheme enabled us to maintain the operating
capability of the business through the worst of the pandemic.
Subsequent to the yearend we have rebranded our Stobart Energy
business as Esken Renewables. This was a requirement of our
decision in May 2020 to sell the Stobart Brands to Logistics
Development Group plc, which was at that time the owner of Eddie
Stobart Logistics, but at the same time reflects more clearly the
description of what the business actually does. The Group, as part
of that transaction was also required to change the name of Stobart
Jet Centre, now London Southend Jet Centre, and Stobart Aviation
Services, now Star Handling Services.
Results
The benefits of the streamlining of our operations can be seen
in our full year results. Esken's core operating divisions
generated a combined adjusted EBITDA of GBP19.5m compared with
GBP3.9m in the prior year. Esken's reported loss before tax of
GBP34.6m represents an improvement compared to the GBP44.2m
reported in the prior year. The loss before tax is after GBP19.0m
of financing costs, GBP20.5m of depreciation, GBP5.4m of net
impairments and GBP12.1m of net central costs (including GBP5.6m of
legal costs relating to historical cases which are still to be
concluded). Esken expects these central costs to reduce
significantly in FY23.
The improvement in adjusted EBITDA is a result of a strong
performance in Esken Renewables which slightly exceeded
expectations to report an adjusted EBITDA of GBP20.3m. The
continued financial discipline of LSA, alongside positive
contributions from Star Handling Services, our check in and
handling business, and the airport's hotel and solar farm meant the
Aviation Division as a whole reported an adjusted EBITDA loss of
GBP0.8m after GBP3.5m of one-off receipts in connection with
Connect Airways and Teesside International Airport.
Esken Renewables' performance followed a full recovery in the
construction sector after interruptions resulting from the first
lockdown in the prior year. This led to an improvement in the
availability of waste wood supplies and a consequent recovery in
gate fees. The other contributing factor was a maturing of the
energy plants which are supplied by Esken. These plants had fewer
unplanned outages in the year allowing us to supply 1.5m tonnes of
biomass fuel compared to 1.4m tonnes in the prior year.
Whilst there is no direct relationship between energy price
increases and our long term RPI linked fuel supply contracts,
improved performance of the energy generators is positive for the
sector as a whole.
Esken Renewables plays a role within the UK's Circular economy
and the journey towards Net Zero. The energy generating stations
which we supply account for c.2% of all energy generated within the
national grid or 1.8m MWh.
Biomass fuel remains a key part of the energy infrastructure
within the UK and we will work closely with the wider sector as the
strategy develops to identify additional opportunities for the
business. Diverting waste wood from landfill to be used as biomass
fuel allowed us to remove 630,000 tonnes of carbon emissions from
entering the atmosphere compared with other means of disposal.
The adjusted EBITDA loss for the Aviation business of GBP0.8m
compared with a loss of GBP6.1m in the prior year is a marked
improvement given the significant drop in passenger numbers through
the period of the pandemic. This performance reflects the strict
financial discipline which has been applied and the continued
income from the global logistics operation. Aviation continued to
be impacted significantly by further lockdowns and the restrictions
on travel across Europe. LSA saw passenger numbers continue to
decline during the year under review being down 36% to 94,000. In
the latter part of the year, higher fuel prices and continuing
uncertainty within the aviation sector has impacted airline
allocation decisions with a number retracting to traditional
established bases despite a market improvement in booking volumes
for Summer 2022.
We were very pleased to see easyJet return to operate flights
from London Southend Airport to Malaga, Palma and Faro for this
summer. We continue to have constructive dialogue with a range of
airlines with a focus on delivering the right airline agreements
for Esken for Summer 2023 onwards.
LSA has stepped up its engagement with the local community. The
airport has for a long time operated well within Government air
quality guidelines with monitoring showing a continuous improvement
in and around the airport over the last decade. We have sought to
build on that position, launching the Connecting Communities
Commitment which detailed an Environmental Action Plan, the launch
of one of the UK's only community noise forums and the
establishment of a partnership with local charity, MIND Essex,
amongst other initiatives.
During the year, the land at Port of Weston in Runcorn increased
in value leading to a small reversal of impairment of GBP0.8m,
resulting in non-core assets with a book value of GBP39.7m as at 28
February 2022, an increase of GBP0.5m on the prior year. The Group
plans to realise value in the short term as the market condition
for asset sales improves.
Environmental, social and governance (ESG)
The focus on connecting with our communities and acting as a
responsible business has been a key theme throughout the business
in the year, with Esken stepping up its ESG activities. We have put
in place an ESG governance structure with Board oversight to
deliver our ESG framework. We have established charity partnerships
for each of the operating businesses, developed a volunteering
framework and started to gather social impact metrics. Esken has
also improved its diversity data, established safety KPIs and
substantially completed our work on establishing our roadmap
towards Net Zero with a clear process for data collection for our
Scope 1 to 3 carbon footprint. We expect to finalise our roadmap to
Net Zero in FY23.
The progress through our ESG framework underpins our desire to
play a key role in reducing the UK's carbon emissions through
renewable energy and sustainable aviation while supporting our
strategic objective to drive sustainable shareholder value over the
medium term. Our renewables business already contributes to the
UK's targets and we have the opportunity at London Southend Airport
to develop future passenger growth in a sustainable way.
Strategy and funding
Our strategy for the Group is clear and was stated last year. We
will focus on the two core operating divisions of Renewables and
Aviation and drive value in these businesses in a sustainable way
over the medium term. All remaining non-core assets will be
realised with the funds being used to reduce residual liabilities
and invest in the core businesses.
We will seek to grow the Renewables business in its core market
and be alert to new opportunities which might arise as the UK
transitions to a Net Zero Carbon economy by 2050. The prime asset
in the Aviation business is LSA which before the pandemic offered
passenger services to over 40 destinations to a catchment area of
over 8m people within an easy travelling distance of the airport.
As air travel continues to recover the London airport market will
once again become capacity constrained.
This fact, coupled with the intrinsic attractiveness in terms of
operating cost, passenger experience and ease of access by rail
from central London underpins our view of the medium-term value of
the airport. We will look to enter into deals with the right
airline and logistics partners which make commercial sense to both
parties as we develop the airport for future sustainable
travel.
The business secured a new GBP125m, seven-year convertible loan
into the airport from CGI and also re-financed the revolving credit
facility (RCF) with our existing lenders; entering into a new
GBP20m facility which matures in February 2023. The airport retains
a ring-fenced cash facility which underpins its funding needs
through the recovery period.
The Group is progressing a review of its banking requirements to
ensure it has sufficient headroom to cover its residual Propius
aircraft liabilities and working capital needs following the expiry
of the RCF in February 2023 .
Board and people
Once again can I express my personal thanks to my Board and all
of our colleagues at Esken for their support over the last year. It
has continued to be a difficult period for everyone both at work
and at home and the efforts and dedication of our staff through
these challenging times has been appreciated.
I have already referred to the decision not to seek to appoint a
new Group Chief Executive and streamline the executive management
team with a view to improving management of the operations while at
the same time mitigating unnecessary cost. In view of the fact that
I will remain in an Executive Chairman position and to ensure
effective oversight and robust corporate governance, David
Blackwood assumed the role of Deputy Chairman and Senior
Independent Director with effect from 3 November 2021. This
enhanced role ensures that the Board and shareholders have a point
of contact independent from myself should they wish to raise any
matters of concern.
In view of the significance of our ESG ambitions we have created
a Board level ESG Committee which Ginny Pulbrook has agreed to
Chair, adding to her responsibilities as the designated Board level
People Director.
John Coombs has indicated his desire to step down from the Board
and he will retire with effect from the conclusion of AGM after
eight years as a Non-Executive Director including three as Chair of
the Remuneration Committee. Clive Condie has agreed to take on the
role as Chair of the Remuneration Committee following the AGM
On behalf of the Board, and personally, I express our thanks to
John for his dedication and commitment to his roles over the last
eight years and would like to wish him well in the future. I wish
to also thank each of my fellow Directors for agreeing to take on
the additional responsibilities. In view of the reduction in scale
of the Group's operations and the fact that we are still in the
recovery phase following the pandemic we now do not intend to
recruit an additional Non-Executive Director to the Board.
We will keep the position under review and ensure that we take
steps to provide adequately for Board succession at the point when
this becomes an issue. While recognising that the Board does not
meet the expected target for diversity and that this will now not
change in the short term, it's the right thing not to add
additional cost into the business at present.
Future
As we emerge finally from the pandemic we, find ourselves facing
the new challenges arising from the impacts of the War in Ukraine,
tight labour market, fuel price inflation and increasing interest
rates. The policy responses to these challenges taken by
governments round the world will undoubtedly have an impact on
business generally and on the markets which we serve. In the last
two years the steps which we have taken to streamline the business
have enhanced our ability to respond quickly to these
challenges.
Our renewables business offers a resilient base given the
increasing demands for carbon neutral energy. Our Aviation business
starts from a low base and given the steps we have taken to
minimise costs, can grow its operations in line with passenger
demand. The inherent desire amongst the public to travel now that
restrictions have been removed is likely to offer a demand-pull in
the aviation sector which will benefit the airport over the medium
term.
We will continue to apply strict financial discipline in the
year ahead ensuring that we take the right decisions for the medium
term. While there is economic and market uncertainty we look ahead
with a degree of confidence as we navigate the recovery phase of
the Group.
David Shearer
Executive Chairman
Financial review
Clarifying the picture
The Group reports a GBP10.3m adjusted EBITDA gain and a GBP34.6m
loss before tax for the year ended 28 February 2022. Whilst this
result demonstrates progress, particularly given the considerable
ongoing challenges in the airline industry, it is worth noting some
one-off items that cloud the picture somewhat, and we think it is
best to qualify the result to give the reader a clear, transparent
view of the Group's performance this year.
There were one-off receipts in the Aviation division totalling
GBP3.5m, associated with Connect Airways and the conclusion of the
partnership with Teesside International Airport. In the
Non-Strategic Infrastructure division an agreement was reached to
exit a long-term onerous property lease, resulting in the release
of provisions and reassessment of lease term, generating GBP4.7m
income.
Aviation emerging from COVID-19
The Aviation division reports an adjusted EBITDA loss of
GBP0.8m, which includes the GBP3.5m Connect Airways and Teesside
benefit. As previously announced, the Group decided to close London
Southend Airport (LSA) to commercial passengers during the Winter
period just gone to position the airport for the beginning of a
return to flying in Summer 2022. With passenger numbers in the year
at less than 5% of pre-COVID-19 levels, we implemented strict cost
control to minimise cash burn.
The majority of European travel restrictions have now been
lifted and the airline industry has seen an improvement in booking
volumes for Summer 2022. LSA is targeting gradual growth through
2022 and 2023 and as the first step on this journey easyJet will
operate three routes out of LSA to Malaga, Palma and Faro.
Renewables bounce back
The Renewables division (previously the Energy division) has had
a strong year seeing an increase in adjusted EBITDA to GBP20.3m
which is now ahead of pre-COVID-19 levels. The supply of waste wood
in the market was far healthier than the prior year, which had a
twofold impact. Firstly, the division was in a much more
competitive position regarding gate fees charged on inbound waste
wood. Secondly, through efficient use of its supply chain, the
division was able to source waste wood from a smaller geographical
area, reducing the need for imports and significantly reducing
costs. The result of these factors is that the business is now well
placed to maintain its pre-COVID-19 level.
Discontinued operations
Following the liquidation of Stobart Air in June 2021, the
results of Stobart Air and Propius are presented in discontinued
operations and the prior year comparatives restated accordingly.
The total loss from discontinued operations of Stobart Air and
Propius, along with some residual costs relating to Stobart Rail,
was GBP2.4m, including a profit on liquidation of GBP11.3m from the
deconsolidation of Stobart Air's balance sheet.
At 28 February 2022 the Group has GBP47.0m of outstanding
liabilities payable through to September 2023 related to ongoing
Propius lease and aircraft-related costs. Towards the end of
calendar year 2022 Propius will begin the staggered hand back of
the eight ATR aircraft to GOAL. The remaining aircraft costs have
been fully provided for in these financial statements, although
there is estimation uncertainty regarding part of the maintenance
provision. The provision excludes any future foreign currency
exchange exposure.
Balance sheet and liquidity
During the year the Group restructured its debt and sourced
alternative funding solutions. An agreement was reached with
Carlyle Global Infrastructure Opportunity Fund (CGI) for a GBP125m
investment in LSA through a 30% convertible debt instrument
(GBP111.5m net), and GBP55.2m of gross proceeds (GBP52.3m net) were
received from a successful capital raise. This enabled the
repayment of the Group's old Revolving Credit Facility (RCF) in
full, which was drawn at GBP108m prior to repayment. A new GBP20m
RCF was agreed which remained undrawn at 28 February 2022. The
Group's headroom at the year end is GBP72.7m and includes GBP14.4m
of ring-fenced cash in LSA and the GBP20m RCF. The Group also has
non-core assets, with a net book value of GBP39.7m, which can be
sold at a time and price most beneficial to the Group.
Revenue
Restated(1)
2022 2021
GBP'm GBP'm Movement
--------------------------------- -------- ------------- ----------
Aviation 23.4 24.7 (5.4%)
Renewables 79.7 74.7 6.6%
--------------------------------- -------- ------------- ----------
Revenue from two main operating
divisions 103.1 99.4 3.7%
Investments - - 0%
Non-Strategic Infrastructure 0.7 1.1 (37.4%)
Group Central and Eliminations 0.8 0.9 4.5%
--------------------------------- -------- ------------- ----------
Total revenue 104.6 101.4 3.2%
--------------------------------- -------- ------------- ----------
Revenue from continuing operations has increased by 3.2% to
GBP104.6m. Revenue from our key growth divisions, Aviation and
Renewables, has increased by 3.7% to GBP103.1m. Revenue in the
Aviation division continues to be significantly impacted by
COVID-19. Passenger numbers at LSA were down by 36.2% year on year,
with the prior year including one month of restriction free flying
prior to lockdown. An increase in gate fees has been the main
driver for the improvement in Renewables revenue, in addition to an
increase in the outbound supply of biomass material.
Profitability
Restated(1)
2022 2021
GBP'm GBP'm Movement
------------------------------------ -------- ------------- ----------
Adjusted EBITDA(2)
Aviation (0.8) (6.1) 87.3%
Renewables 20.3 10.0 103.0%
------------------------------------ -------- ------------- ----------
Adjusted EBITDA(2) from two
main operating divisions 19.5 3.9 397.1%
Investments (0.4) 0.1 (404.7%)
Non-Strategic Infrastructure 3.3 (1.7) 297.2%
Group Central and Eliminations (12.1) (9.7) (24.3%)
------------------------------------ -------- ------------- ----------
Adjusted EBITDA(2) 10.3 (7.4) 238.9%
Depreciation (20.5) (19.4)
(Impairment)/reversal (5.4) 0.8
Impairment of loan notes - (8.0)
Finance costs (net) (19.0) (10.2)
------------------------------------ -------- -------------
Loss before tax (34.6) (44.2)
------------------------------------ -------- -------------
Tax 9.9 7.1
------------------------------------ -------- -------------
Loss for the year from continuing
operations (24.7) (37.1)
------------------------------------ -------- -------------
Loss from discontinued operations,
net of tax (2.4) (118.0)
------------------------------------ -------- -------------
Loss for the year (27.1) (155.1)
------------------------------------ -------- -------------
1 2021 results have been restated where required in line with
IFRS 5 Discontinued Operations.
2 Adjusted EBITDA represents profit/(loss) before interest, tax,
depreciation and impairments. Refer to Segmental information note
for reconciliation to statutory loss before tax.
Profitability
Adjusted EBITDA and profit before tax are the Group's key
measures of profitability. Adjusted EBITDA has increased by 238.9%
to a GBP10.3m gain (2021: GBP7.4m loss) and the loss before tax has
decreased by GBP9.6m to GBP34.6m (2021: GBP44.2m).
The Aviation division adjusted EBITDA has increased by 87.3% to
a loss of GBP0.8m (2021: GBP6.1m) primarily due to GBP3.5m of
one-off receipts associated with Connect Airways and the conclusion
of the partnership with Teesside International Airport, and a
reduction in airline support costs. In the Renewables division,
performance has returned to pre-COVID-19 levels with an increase in
gate fees and a reduction in the cost of sourcing waste wood
leading to adjusted EBITDA increasing by 103.0% to GBP20.3m (2021:
GBP10.0m).
In the Non-Strategic Infrastructure division, the agreement to
exit a long-term onerous property lease is the main driver of the
increase in adjusted EBITDA to a gain of GBP3.3m (2021: GBP1.7m
loss). The Group Central and Eliminations adjusted EBITDA loss
increased by 24.3% to GBP12.1m (2021: GBP9.7m) mainly due to
one-off legal fees and an increase in the provision for part 1
claims relating to LSA.
Business segments
The business segments reported in the financial statements are
Aviation, Renewables, Investments and Non-Strategic Infrastructure,
which represent the operational and reporting structure of the
Group.
The Operational Review contains further details about the
performance of the operating divisions.
The fair value of the investment in Logistics Development Group
plc (LDG), reduced by GBP1.2m (2021: GBP5.7m increase) due to a
decrease in the LDG share price. The loss on revaluation of the
investment to current market share price is presented in the
consolidated statement of comprehensive income.
The Non-Strategic Infrastructure division continues to realise
value from its property assets when the time and price is right. At
28 February 2022, the book value of Infrastructure assets held was
GBP39.7m (2021: GBP39.2m). During the year, there were no (2021:
one) property disposal that generated net proceeds of GBPnil (2021:
GBP1.4m).
Depreciation
Depreciation has remained broadly in line year on year, with the
small increase from GBP19.4m to GBP20.5m, principally due to fixed
asset additions in the Aviation division related to terminal
improvements at LSA.
Impairments
A right-of-use asset relating to land leased in Widnes has been
impaired by GBP6.2m. The land relates to a sale-and-leaseback
transaction and was recognised following the adoption of IFRS 16.
It was anticipated that the land would be used in the Renewables
division but during the year the Group reassessed its strategy for
the use of the land and concluded that this was not viable. The
impairment is non-cash and does not impact the trading operations
of any business unit.
At the year end three land and building and property inventory
assets were subject to external independent development valuations.
This led to an overall reversal of impairment of GBP0.8m (2021:
GBP0.8m).
In the prior year shareholder loan notes relating to Mersey
Bioenergy Holdings Limited, the Widnes biomass plant owner, were
impaired from GBP8.0m to GBPnil shown on a separate line,
Impairment of loan notes, on the consolidated income statement.
There has been no change in the impairment of the loan notes in the
current year.
Finance costs
Finance costs increased by GBP8.0m to GBP21.2m, mainly due to
interest charged on the Carlyle convertible debt instrument in the
current year and higher interest charges on the RCF prior to its
repayment. Finance income decreased by GBP0.8m to GBP2.2m primarily
due to a decrease in the interest received on the change in fair
value of financial liabilities.
Tax
The tax credit on continuing operations of GBP9.9m (2021:
GBP7.1m) reflects an effective tax rate of 28.5% (2021: 16.0%). The
effective rate is higher than the standard rate of 19%, mainly due
to the settlement and release of the uncertain tax position.
Deferred tax has been calculated at the blended rate. The amounts
expected to unwind pre 1 April 2023 are calculated at 19% and the
amounts expected to unwind post 1 April 2023 are calculated at
25%.
Discontinued operations
On 14 June 2021 Stobart Air was placed into liquidation and its
balance sheet was deconsolidated from the Group accounts. The
operational loss of Stobart Air prior to liquidation of GBP1.1m and
the profit on liquidation of GBP11.3m are presented in discontinued
operations. Following the liquidation of Stobart Air, the results
of Propius, our aircraft leasing business that leased all eight of
its aircraft to Stobart Air, have been presented as discontinued.
Propius is abandoned in line with the IFRS 5 definition of a
discontinued operation. The operational loss of Propius of GBP12.3m
has been presented in discontinued operations. The prior period
results have been restated within the consolidated income
statement, consolidated statement of cash flows and accompanying
notes accordingly. The current year loss from discontinued
operations also includes a GBP0.3m loss related to residual costs
from the disposal of Stobart Rail in the prior year.
Loss per share
Loss per share from continuing operations was 2.99p (2021:
6.89p). Total basic loss per share was 3.28p (2021: 28.81p).
Share movements and dividends
On 7 May 2021 the Group issued 6,000,000 new ordinary shares to
Cyrus Capital Partners (Cyrus) to satisfy the put option between
Esken and Cyrus. On 26 August 2021 the Group issued 394,410,618 new
ordinary shares following a Firm Placing and Placing and Open Offer
(Capital Raise). The Capital Raise resulted in gross proceeds of
GBP55.2m (GBP52.3m net).
The number of shares held by the employee benefit trust
increased from 3,778,457 at 28 February 2021 to 4,600,764 at 28
February 2022 after the trust purchased 822,307 shares issued on
the Capital Raise.
Balance sheet
2022 2021
GBP'm GBP'm
------------------------- -------- --------
Non-current assets 353.5 369.4
Current assets 89.2 55.4
Non-current liabilities (239.6) (172.6)
Current liabilities (133.0) (203.9)
------------------------- -------- --------
Net assets 70.1 48.3
------------------------- -------- --------
Net assets have increased by GBP21.8m, mainly due to the Capital
Raise partially offset by the loss in the year.
The overall value of property, plant and equipment (PPE) of
GBP265.6m (2021: GBP285.6m) has decreased in the year mainly due to
depreciation charge across the Group and impairment of the Widnes
land, partly offset by fixed asset additions related to terminal
improvements at LSA and plant and machinery in Renewables. Other
financial assets have increased by GBP3.7m due to an investment in
an insurance captive cell, partly offset by the downward
revaluation of the investment in LDG.
Current assets have increased principally due to a higher cash
balance at year end of GBP52.7m (2021: GBP12.4m), see following
section on the major cash flows in the year.
Non-current liabilities have increased from GBP172.6m to
GBP239.5m. In the year a GBP118.9m liability was recognised on the
balance sheet for the CGI convertible debt. This is partially
offset by a GBP23.4m reduction in lease liabilities, due to
de-consolidation of Stobart Air's balance sheet and capital
repayments. There was also a reduction in non-current provisions of
GBP26.3m. The main drivers of this were corporation tax, due to a
GBP9.5m release and GBP3.3m reclass to corporation tax and other
creditors, a GBP5.0m reduction in maintenance provisions, mostly
due to a reclass to current liabilities, and a GBP3.9m reclass of
development commitment provisions to current liabilities.
Current liabilities have reduced mainly due to the repayment of
the GBP52.3m RCF liability and a GBP20.4m reduction in trade and
other payables, the main driver of which was the de-consolidation
of Stobart Air's balance sheet.
Debt and gearing(1)
2022 2021
-------------------------- ----------- ------------
Loans and borrowings GBP294.6m GBP263.2m
Cash (GBP52.7m) (GBP12.4m)
-------------------------- ----------- ------------
Net debt GBP241.9m GBP250.8m
-------------------------- ----------- ------------
Adjusted EBITDA/interest 0.6 (0.8)
Net debt/total assets 54.6% 59.0%
Gearing 344.9% 519.2%
-------------------------- ----------- ------------
1 See Alternative performance measures note for an explanation
and reconciliation of gearing.
During the year the Group agreed the GBP125m convertible debt
instrument with CGI. A new GBP20m RCF was signed with the current
bank lenders replacing the old GBP120m RCF, which was fully repaid
in the period. At 28 February 2022 the committed undrawn headroom
on the GBP20m (28 February 2021: GBP120m) RCF was GBP20m (28
February 2021: GBP65m), and with a cash balance of GBP52.7m (28
February 2021: GBP12.4m), total headroom was GBP72.7m (28 February
2021: GBP77.4m).
Cash flow
2022 2021
GBP'm GBP'm
------------------------- ------- -------
Operating cash flow 2.8 0.8
Investing activities (5.2) 6.0
Financing activities 82.2 43.8
------------------------- ------- -------
Increase in the year 79.8 50.6
Discontinued operations (39.5) (48.0)
At beginning of year 12.4 9.8
------------------------- ------- -------
Cash at end of year 52.7 12.4
------------------------- ------- -------
Discontinued cash flows in the year primarily relate to the
operations of Stobart Air and Propius.
Investing activities include outflows of GBP4.9m for the
investment in the insurance captive cell and GBP3.0m for the
purchase of plant, property and equipment (PPE). Investing inflows
include GBP1.5m for the receipt of the capital element of net
investment in leases and GBP1.1m from the sale of PPE.
Financing activities includes net proceeds from the CGI
convertible debt GBP111.5m and the Capital Raise GBP52.3m.
Offsetting this there were outflows for the net repayment of the
RCF GBP58.2m, the repayment of the capital element of lease
obligations GBP17.0m, and interest payments GBP9.0m.
Lewis Girdwood
Chief Financial Officer
Operating reviews
Esken Renewables
Esken Renewables enjoyed a strong financial performance
throughout FY22. While tonnes supplied was relatively flat, moving
from 1.4m to 1.5m tonnes, adjusted EBITDA improved significantly
from GBP10.0m to GBP20.3m, marginally ahead of the expected range
of GBP18-20m. This performance is mainly as a result of improved
gate fee pricing following the resolution of COVID-19 market
impacts and the actions taken by management both this year and in
previous years to optimise performance and adapt to gate fee
pricing dynamics.
The supply of waste wood in the UK has now stabilised, with
construction site activity fully resumed, and Household Waste and
Recycling Centres largely open and operational. Demand has also
been more consistent, with biomass plants now commissioned and
moving to optimise operational performance through the coming
years. This in turn has led to more consistent fuel sales. The
consistency of supply and demand on waste wood means that we now
expect effective management to result in gate fees stabilising
around current levels, adhering to normalised price structures.
With gate fees now stable, Esken's focus is to optimise
performance. Central to this is to build, maintain and enhance
customer and supplier relationships. In the prior year, as a result
of challenges brought about by the UK's various COVID-19 lockdowns,
Esken Renewables focused on ensuring that all its customer demand
needs were met in a controlled and planned way. As a result, we
were able to capitalise on its strengthened relationships and work
alongside its partners to develop a defined plan for satisfying
demand throughout FY22 with clearly forecasted and planned plant
downtime and demand peaks.
Furthermore, this visibility enabled Esken Renewables to
optimise the use of its national network of suppliers and
infrastructure. The ability to take waste wood at the time and in
the locations where gate fees can be maximised, and move it and
store it for where and when it is needed, allows us to provide fuel
supply resilience and service for our customers.
Despite these strengths, Esken Renewables continued to manage a
range of supply chain risks throughout the year under review. One
of our plant customers undertook a series of major maintenance
activities during FY22, impacting our anticipated fuel sales. The
extensive maintenance undertaken will likely result in robust plant
availability in future years.
The business also successfully navigated the national HGV driver
shortage, putting in in place strategies to largely mitigate wage
inflation through highlighting training, development and job
security. It managed rising diesel
and insurance costs through RPI linked contracts and other
pricing levers, whilst it also sought to secure skilled
and experienced drivers.
While a number of underlying costs have increased, so too have
wholesale energy prices. There is no direct relationship between
energy price increases and Esken Renewables' long-term RPI-linked
biomass fuel supply contracts. However, stronger and more
profitable customers are good for Esken Renewables, particularly
when our customers are motivated to increase availability and
generate additional bioenergy.
It is important to differentiate sustainable bioenergy, which
Esken Renewables supports, from other types of imported,
virgin-derived biomass fuel. Two thirds of the biomass fuel that
Esken Renewables supplies is waste wood that would otherwise likely
be destined for landfill. In this financial year we received,
processed, and supplied over 1.1m tonnes of waste wood, saving the
UK up to 630,000 tonnes of greenhouse gas from landfill methane
emissions.
The remaining biomass fuel that we supply is sourced from
managed woodlands and forestry by-products supplied alongside a
small amount of higher-quality biomass. Our strategic partner AW
Jenkinson Forest Products supplies the majority of this product,
with Esken Renewables managing the contract, and customer
relationship. Esken Renewables also delivers forest by-products
that it sources directly from a combination of arboricultural
residues, branches and bark residues from harvesting by its own
forestry team.
Ensuring that wood from the construction industry or from forest
by-products is not wasted, and instead used to provide renewable
fuel, allows us to play a key role in the UK's circular economy.
Increasing our role within this sphere is a key area of focus and
part of the motivation to change name from Stobart Energy to Esken
Renewables, also allowing the business to fulfil its share of the
obligation under the brand sale agreement that was struck with
Eddie Stobart Logistics plc in 2020.
Esken Renewables sees opportunities to secure additional biomass
supply capacity at existing UK biomass plants. It will seek to do
this, alongside exploring opportunities to supply other types of
renewable fuels that leverage the existing infrastructure. Doing so
will enable the business to build on its existing UK-wide footprint
and enable further profitable growth.
London Southend Airport Review
After a period of immense challenge, the aviation sector is now
starting to see the green shoots of recovery. Travel restrictions
to many of the UK's most popular destinations have been relaxed. As
a result, an increasing number of people are booking flights for
the Summer 22 season with confidence.
This growing confidence is starting to underpin a recovery at
London Southend Airport. easyJet is now operating flights from
London Southend Airport to three summer destinations: Malaga, Palma
and Faro. These are hugely popular, proven routes. Though we are
still at an early stage of this operation, signs are encouraging.
It is our expectation that the strong performance of these routes
will help encourage easyJet and other airlines to put on sale
further flights for FY24 and beyond as we continue to work toward a
positive cash contribution.
The return of easyJet flights to London Southend Airport
following its base closure in FY20 is of course a major milestone
in the airport's recovery. However, there remains much to do to
return the airport to the scale of growth it experienced
pre-pandemic. The easyJet flights have been secured on mutually
positive economic terms, and we will continue to focus on further
airline agreements that are profitable for all parties.
We have a clear strategy to capture the recovery and long-term
growth in commercial passenger flying, with airlines attracted to
our clear proposition of proven routes, cost-effective operations
and an attractive and growing catchment area with strong transport
links to London. Esken and London Southend Airport will continue to
develop and refine that proposition to ensure the right building
blocks are in place to rebound quickly on the back of securing the
right commercial agreements.
During the year, London Southend Airport moved to strengthen its
operating board, making two high-quality external appointments
while also promoting from within. London Southend Airport appointed
Phil Grewock, an experienced Finance Director whose previous
experience includes Warwick Estates, Stansted Airport and
Countrywide PLC, and who played a key role in securing GBP1.2bn of
project finance for London Gateway Phase 1. The airport also
appointed Nigel Mayes as Business Development Director. Nigel has
over 25 years' industry experience, most recently as Managing
Director for Routes, and has been responsible for the development
of over 100 new air services for various clients. London Southend
Airport also made two internal appointments, promoting Caroline
Fitzgerald to Commercial Director and Marc Taylor to Operations
Director. Phil, Nigel, Caroline and Marc join airport CEO, Glyn
Jones, and Executive Director - Aviation, Lewis Girdwood, on a
reformed operational board, as well as by representatives from our
strategic partner, Carlyle.
London Southend Airport has also invested time and energy to
develop its community relationships. During the year, we launched
our Connecting the Communities Commitment, encompassing an
Environmental Action Plan, a two-year charity partnership with MIND
South Essex, the launch of one of the UK's only Community Noise
Forums and a range of employment and education initiatives. The
airport continues its journey towards carbon neutrality, through
its membership of the Airport Carbon Accreditation scheme and saw a
further improvement in air quality as reported from its NOx
monitoring programme.
The airport has made these advances, alongside further
investments in next generation baggage scanning equipment and an
exploration of improved digital marketing technologies, against a
backdrop of continued strict financial discipline. Passenger
numbers during the year under review continued to fall, with the
airport welcoming 94k passengers, compared to 147k in the prior
year. As previously reported, Ryanair announced its decision to
close its base from the end of October 2021 and in light of that
development London Southend Airport chose to close its passenger
terminal for the Winter season, allowing it to reduce its cost
base.
Despite this further reduction in passenger numbers, the
Aviation division has continued to report an improved financial
position. Adjusted EBITDA improved to a loss of GBP0.8m compared to
a loss of GBP6.1m in the prior year. This performance reflects
GBP3.5m of one-off receipts associated with Connect Airways and
Teesside International Airport, and positive contributions from our
check-in and baggage handling company, Star Handling (formerly
Stobart Aviation Services), as well as the airport's hotel and
solar farm. The Airport has also benefitted from income from its
global logistics operation. However, this operation has reduced in
scale over the course of the year. Aircraft turns have reduced to
one arrival and departure daily at the current time, but we do
expect this to increase over the medium term.
That generally positive trend underpins the Group's outlook for
London Southend Airport. The impact of rising fuel prices on
customer demand and capacity is at this stage unclear. However, we
are now emerging from the pandemic-driven crisis with a return to
flights with a significant airline and the expectation of more
flights and more airlines to come. The discussions with airlines
will be aided by a strengthened management team, alignment with our
investment partner, and a clearly defined airport proposition.
Consolidated income statement
For the year ended 28 February 2022
Restated(1)
Year ended Year ended
28 February 28 February
2022 2021
GBP'000 GBP'000
---------------------------------------- -------------- -------------
Continuing operations
Revenue 104,633 101,404
Other income 8,364 389
Operating expenses - other (102,479) (109,039)
Share of post-tax losses of associates
and joint ventures (356) (218)
Gain on swaps 93 80
---------------------------------------- -------------- -------------
Adjusted EBITDA 10,255 (7,384)
---------------------------------------- -------------- -------------
Depreciation (20,464) (19,424)
(Impairment)/reversal of impairment
of property assets (5,369) 824
Operating loss (15,578) (25,984)
---------------------------------------- -------------- -------------
Impairment of loan notes - (8,000)
Finance costs (21,228) (13,191)
Finance income 2,239 3,004
----------------------------------------
Loss before tax (34,567) (44,171)
Tax 9,865 7,083
---------------------------------------- -------------- -------------
Loss for the year from continuing
operations (24,702) (37,088)
---------------------------------------- -------------- -------------
Discontinued operations
Loss from discontinued operations,
net of tax (2,386) (118,025)
---------------------------------------- -------------- -------------
Loss for the year (27,088) (155,113)
---------------------------------------- -------------- -------------
Loss per share expressed in pence
per share - continuing operations
Basic (2.99)p (6.89)p
Diluted (2.99)p (6.89)p
---------------------------------------- -------------- -------------
Loss per share expressed in pence
per share - total
Basic (3.28)p (28.81)p
Diluted (3.28)p (28.81)p
---------------------------------------- -------------- -------------
(1) The 2021 results have been restated where required due to
IFRS 5 Discontinued Operations.
Consolidated statement of comprehensive income
For the year ended 28 February 2022
Restated(1)
Year ended Year ended
28 February 28 February
2022 2021
GBP'000 GBP'000
Loss for the year (27,088) (155,113)
Discontinued operations, net of
tax, relating to exchange differences (1,824) 3,826
------------------------------------------
Other comprehensive (expense)/income
- items that are or may be reclassified
subsequently to profit or loss,
net of tax (1,824) 3,826
Remeasurement of defined benefit
plan 1,876 1,176
Change in fair value of financial
assets classified as fair value
through other comprehensive income (1,187) 4,643
Rent review of property headlease
and sublease (323) -
Tax on items relating to components
of other comprehensive income (417) (182)
------------------------------------------
Other comprehensive (expense)/income
- items that will not be reclassified
to profit or loss, net of tax (51) 5,637
------------------------------------------
Other comprehensive (expense)/income
for the year, net of tax (1,875) 9,463
------------------------------------------ -------------- -------------
Total comprehensive expense for
the year (28,963) (145,650)
------------------------------------------ -------------- -------------
(1) The 2021 results have been restated where required due to
IFRS 5 Discontinued Operations.
Of the total comprehensive expense for the year, a loss of
GBP24,753,000 (2021: GBP31,451,000) is in respect of continuing
operations and a loss of GBP4,210,000 (2021: GBP114,199,000) is in
respect of discontinued operations.
Consolidated statement of financial position
As at 28 February 2022
28 February 28 February
2022 2021
GBP'000 GBP'000
------------------------------------ ------------ ------------
Non-current assets
Property, plant and equipment 265,637 285,621
Investment in associates and joint
ventures 1,016 1,372
Other financial assets 14,105 10,392
Intangible assets 54,669 54,669
Net investment in leases 16,204 15,824
Defined benefit pension surplus 348 -
Trade and other receivables 1,495 1,495
------------------------------------ ------------ ------------
353,474 369,373
------------------------------------ ------------ ------------
Current assets
Inventories 12,552 15,334
Trade and other receivables 23,883 27,378
Cash and cash equivalents 52,738 12,408
Corporation tax - 324
------------------------------------
89,173 55,444
------------------------------------ ------------ ------------
Total assets 442,647 424,817
------------------------------------ ------------ ------------
Non-current liabilities
Loans and borrowings (217,539) (122,116)
Defined benefit pension obligation - (2,418)
Other liabilities (8,643) (8,271)
Deferred tax - (261)
Provisions (13,279) (39,534)
------------------------------------
(239,461) (172,600)
------------------------------------ ------------ ------------
Current liabilities
Trade and other payables (30,160) (52,735)
Financial liabilities - (1,581)
Loans and borrowings (24,714) (89,121)
Exchangeable bonds (52,385) (52,010)
Corporation tax (5,110) -
Provisions (20,674) (8,457)
------------------------------------
(133,043) (203,904)
------------------------------------ ------------ ------------
Total liabilities (372,504) (376,504)
------------------------------------ ------------ ------------
Net assets 70,143 48,313
------------------------------------ ------------ ------------
Capital and reserves
Issued share capital 102,534 62,492
Share premium 403,225 390,336
Foreign currency exchange reserve 218 3,826
Reserve for own shares held by
employee benefit trust (7,596) (7,480)
Retained deficit (428,238) (400,861)
------------------------------------
Group shareholders' equity 70,143 48,313
------------------------------------ ------------ ------------
Consolidated statement of changes in equity
For the year ended 28 February 2022
Reserve
Foreign for own
Issued currency shares
share Share exchange held by Retained Total
capital premium reserve EBT deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- ---------- --------- ---------- ---------
Balance at 1 March
2021 62,492 390,336 3,826 (7,480) (400,861) 48,313
Loss for the year - - - - (27,088) (27,088)
Other comprehensive
expense for the
year - - (1,824) - (51) (1,875)
-------------------------- --------- --------- ---------- --------- ---------- ---------
Total comprehensive
expense for the
year - - (1,824) - (27,139) (28,963)
Issue of ordinary
shares 40,042 12,889 - - (600) 52,331
Employee benefit
trust - - - (116) (4) (120)
Reclassification
of exchange
differences on disposal
of
subsidiaries - - (1,784) - - (1,784)
Share-based payment
charge - - - - 285 285
Tax on share-based
payment charge - - - - 81 81
Balance at 28 February
2022 102,534 403,225 218 (7,596) (428,238) 70,143
-------------------------- --------- --------- ---------- --------- ---------- ---------
For the year ended 28 February 2021
Reserve
Foreign for own
Issued currency shares
share Share exchange held by Retained Total
capital premium reserve EBT deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- ---------- --------- ---------- ----------
Balance at 1 March
2020 37,465 324,368 - (7,161) (251,574) 103,098
Loss for the year - - - - (155,113) (155,113)
Other comprehensive
income for the year - - 3,826 - 5,637 9,463
------------------------ --------- --------- ---------- --------- ---------- ----------
Total comprehensive
income/(expense)
for the year - - 3,826 - (149,476) (145,650)
Issue of ordinary
shares 25,027 65,968 - - - 90,995
Employee benefit
trust - - - (319) 3 (316)
Share-based payment
credit - - - - 190 190
Tax on share-based
payment credit - - - - (4) (4)
Balance at 28 February
2021 62,492 390,336 3,826 (7,480) (400,861) 48,313
------------------------ --------- --------- ---------- --------- ---------- ----------
Consolidated statement of cash flows
For the year ended 28 February 2022
Restated(1)
Year ended Year ended
28 February 28 February
2022 2021
GBP'000 GBP'000
---------------------------------------- -------------- -------------
Cash generated from continuing
operations 2,846 1,291
Cash outflow from discontinued
operations (17,330) (30,269)
Income taxes paid - (465)
---------------------------------------- -------------- -------------
Net cash outflow from operating
activities (14,484) (29,443)
Purchase of property, plant and
equipment (3,015) (3,022)
Purchase/development of property
inventories - (164)
Proceeds from the sale of property,
plant and equipment 1,115 426
Proceeds from disposal of assets
held for sale - 9,867
Receipt of capital element of net
investment in lease 1,547 768
Acquisition of subsidiary undertakings
(net of cash acquired and fees) - (864)
Cash disposed on liquidation/disposal
of subsidiary undertakings (362) (1)
Acquisition of other investments (4,900) (973)
Interest received 415 -
Cash outflow from discontinued
operations (7,808) (1,058)
---------------------------------------- -------------- -------------
Net cash (outflow)/inflow from
investing activities (13,008) 4,979
---------------------------------------- -------------- -------------
Proceeds from the issue of ordinary
shares (net of issue costs) 52,330 90,996
Proceeds from issue of convertible 111,459 -
debt (net of costs)
Proceeds from grants 2,600 -
Principal element of lease payments (17,026) (12,973)
Net repayment of revolving credit
facility (net of costs) (58,165) (24,286)
Repayment of other borrowings - (4,500)
Interest paid (8,992) (5,445)
Cash outflow from discontinued
operations (14,384) (16,722)
----------------------------------------
Net cash inflow from financing
activities 67,822 27,070
---------------------------------------- -------------- -------------
Increase in cash and cash equivalents 40,330 2,606
---------------------------------------- -------------- -------------
Cash and cash equivalents at beginning
of year 12,408 9,802
---------------------------------------- -------------- -------------
Cash and cash equivalents at end
of year 52,738 12,408
---------------------------------------- -------------- -------------
(1) The 2021 results have been restated where required due to
IFRS 5 Discontinued Operations.
Notes to the consolidated financial statements
For the year ended 28 February 2022
Accounting policies of Esken Limited
Basis of preparation and statement of compliance
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 28 February 2022
and 28 February 2021. The information presented is an extract from
the audited consolidated Group statutory accounts. The Auditors
have reported on those accounts; their report was (i) unqualified,
and (ii) contains a material uncertainty in respect of going
concern to which the auditor drew attention by way of emphasis
without modifying their report. The Auditors' report can be found
in the Group's full 2022 Annual Report and Accounts which will be
published on the Group's website.
These Group financial statements have been prepared in
accordance with UK-adopted international accounting standards.
The financial statements of the Group are also prepared in
accordance with the Companies (Guernsey) Law 2008.
Esken Limited (the Company) is a Guernsey-registered company.
The Company's ordinary shares are traded on the London Stock
Exchange.
Measurement convention
The financial statements are prepared on the historical cost
basis except financial assets held at fair value through other
comprehensive income (FVOCI) and derivative financial instruments
which are stated at their fair value.
Going concern
The Group's business activities, together with factors likely to
affect its future performance and position, are set out in the
Executive Chairman's statement and the financial position of the
Group, its cash flows and funding are set out in the Financial
Review.
The financial statements include details of the Group's loans
and borrowings at the year end, together with the Group's
objectives, policies and processes for managing its capital, its
financial risk management objectives, details of its financial
instruments and its exposure to credit risk and liquidity risk.
After making enquiries, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future until May 2024 (representing
the maturity of the exchangeable bond and the going concern
assessment period). Accordingly, the financial statements have been
prepared on a going concern basis. However, there is a material
uncertainty in respect of this going concern assumption and the
Directors have exercised a significant degree of judgement in
concluding that the Group remains a going concern. In particular,
the assumption that a refinancing will be completed at a sufficient
level prior to the expiration of the revolving credit facility
(RCF) and exchangeable bond that mature in February 2023 and May
2024 respectively.
In performing the going concern assessment, the Directors have
reviewed the cash flow forecasts together with the funding options
that may be available to the Group and the likelihood of them being
accessible, including additional funding in excess of GBP100m, in
the timescale required and anticipated in the forecasts, which
cover the period up to May 2024. The additional funding required
principally covers Propius aircraft liabilities, payable over the
period to September 2023, and GBP43.9m for the refinancing of the
exchangeable bond (bond) in May 2024, based on year end valuations.
The cash outflow for the bond, with nominal value of GBP53.1m, is
dependent on the value of the offsetting listed share collateral
held at the date of maturity, valued at GBP9.2m, at 28 February
2022.
As at 28 February 2022, the Group had cash balances of GBP52.7m
and an undrawn RCF of GBP20.0m, resulting in headroom as of that
date of GBP72.7m. However, any drawdowns from the RCF are subject
to bank consent. Included in this GBP52.7m of cash is GBP14.4m of
cash ringfenced in London Southend Airport (LSA) and its
subsidiaries, as part of the Carlyle Global infrastructure
Opportunity Fund (CGI) convertible debt facility. Whilst the Group
continues to tightly manage its cash resources during the post year
end period, the current position is that the Group needs to
complete a refinancing of at least GBP50m prior to the expiration
of the RCF on 1 February 2023, or complete significant asset
disposals, otherwise the Group may be unable to continue trading.
In addition, further refinancing will need to occur before the
expiration of the exchangeable bond in May 2024 of at least GBP50m,
unless this requirement is covered by the initial refinancing prior
to 1 February 2023. The Directors have a reasonable expectation,
following discussions with external parties, that the required
refinancing will be completed within the timescales required.
Should the refinancing not successfully complete before the
expiration of the RCF the Group will have severe liquidity issues
and the Director's would have a limited amount of time to raise
additional funds, for example through an equity raise or a
distressed sale of major assets, and this may not be completed in
sufficient time to allow the Group to continue trading.
Consequently, the Group, in all likelihood, would need to market
LSA for sale. Under both the base and plausible downside scenario,
Group liquidity following the maturity of the existing RCF on 1
February 2023 becomes negative, excluding any additional mitigating
actions such as the proceeds from disposal of non-core assets.
The reasonableness of the assumption made by the Directors that
the refinancing funds will be received is a significant judgement
and consequently there is a material uncertainty in respect of
securing the necessary funds. The Directors have prepared base case
forecasts to May 2024, together with sensitivity analysis on those
forecasts, including a severe but plausible downside set of
assumptions detailed below. On the assumption that the above
planned refinancing is successful, the base case forecast indicates
Group headroom of c.GBP24m at May 2024; and the severe but
plausible downside indicates that the Group will have headroom of
c.GBP13m at this point. This excludes any cash inflows from
non-core asset sales or the potential mitigation of leased aircraft
cashflows should the opportunity arise to return the aircraft
earlier than expected.
The Renewables division has recovered to its pre-COVID-19
volumes, and the gate fee decline observed as a result of COVID-19
have now reversed. The Aviation division has shown initial signs of
recovery but at a much slower pace as airlines continue to arrange
their scheduling and routes, whilst considering the different
COVID-19 government policies across Europe and availability of
aircraft, pilots and crew as well as the difficulties from the
ongoing conflict in Eastern Europe. In particular, and for the
purposes of this going concern analysis only, the base case
forecast assumes:
-- The Group completes the refinancing before the required time,
resulting in additional funding in excess of c.GBP100m of which
c.GBP50m will be used to settle liabilities in relation to legacy
aircraft leases following the liquidation of the regional airline
Stobart Air;
-- The Group terminates its undrawn RCF facility of GBP20m prior to its expiration;
-- A resumption of flying from May 2022, with full year
passenger volumes from LSA of c.0.5m for the year ending 28
February 2023 and c.1.4m passengers in the year ending 28 February
2024;
-- Continued performance of the Renewables division in relation
to gate fee income along with the major plants we supply continuing
to take their contractual volumes;
-- An expectation that the Group will receive no mitigation of
leased aircraft cashflows, scheduled for redelivery between
November 2022 and September 2023; and
-- No cash received in respect of non-core asset disposals, with
the exception of c.GBP1m from the disposal of a small land plot
currently ongoing. The RCF reduces from GBP20m at a rate of 25% of
net disposal proceeds of non-core assets as those assets are
disposed of.
The severe but plausible downside forecast includes a
significant reduction in 2023 and 2024 Aviation operational
performance due to the slower recovery following the COVID-19
pandemic and reduced trading performance across both Aviation and
Renewables operations, resulting in a cash reduction to forecast.
However, the severe but plausible forecast maintains the assumption
that the refinancing will complete prior to the August 2022 interim
period end and, as a result, the severe but plausible downside
scenarios do not have a material impact on the ability of the Group
to continue in operational existence for the foreseeable
future.
The severe but plausible downside forecast includes the
following in addition to the base case assumptions above:
-- Passenger volume growth from LSA is slowed and a reduction in cargo rotations;
-- No new incremental business in Aviation Services in the next financial year; and
-- Reduction in Renewables plant availability with an associated
decrease in volume supplied within the terms of the contractual
agreements, reduction in driver numbers resulting in increased
numbers of unused trucks, and a reduction in gate fees to c.85% of
base case.
Overall, the Directors are satisfied that the group will have
sufficient funds to continue to meet its liabilities as they fall
due until at least May 2024 and therefore have prepared the
financial statements on a going concern basis. However, as
previously noted this is highly dependent on the successful
completion of the Group's refinancing plans which indicate the
existence of a material uncertainty related to events or conditions
that may cast significant doubt on the ability of the Group to
continue as a going concern and, therefore, to continue realising
its assets and discharging its liabilities in the normal course of
business. The financial statements do not include any adjustments
that would result from the basis of preparation being
inappropriate.
Significant accounting policies
Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the
previous financial year except as follows:
(a) New standards, amendments to existing standards and
interpretations to existing standards adopted by the Group
The Group has considered the following amendments and
definitions that are effective in this financial year and concluded
that they do not have a material impact on the financial position
or performance of the Group:
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020
-- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16)
(b) New standards and interpretations not applied
The following UK-endorsed standards and amendments have an
effective date after the date of these financial statements:
Effective for
accounting periods Proposed
commencing on adoption in
or after the year ending
----------------------------------------------- -------------------- ------------------
Definition of Accounting Estimates 1 January 2023 28 February
(Amendments to IAS 8) 2023
Deferred Tax Related to Assets and 1 January 2023 28 February
Liabilities Arising from a Single Transaction 2023
(Amendments to IAS 12)
Disclosure of Accounting Policies (Amendments 1 January 2023 28 February
to IAS 1 and IFRS Practice Statement 2023
2)
----------------------------------------------- -------------------- ------------------
The adoption of these standards and amendments is not expected
to have a material effect on the net assets, results and
disclosures of the Group. There are no other new EU-endorsed
standards and amendments that are issued but not yet effective that
would be expected to have a material impact on the Group in future
reporting periods and on foreseeable future transactions.
Segmental information
The reportable segment structure is determined by the nature of
operations and services. The operating segments are Aviation,
Renewables, Investments and Non-Strategic Infrastructure. In the
current year the Energy segment was renamed to the Renewables
segment. In the prior year, the results of Stobart Air and Propius
were included in the Investments reporting segment. However,
following the liquidation of Stobart Air and abandonment of
Propius, the results of Stobart Air and Propius are no longer
included in the Investments segment but are presented as
discontinued operations on the face of the consolidated income
statement.
The Aviation segment specialises in the operation of commercial
airports and the provision of ground handling services. The
Renewables segment specialises in the supply of sustainable biomass
material for the generation of renewable energy. No segmental
assets or liabilities information is disclosed because no such
information is regularly provided to, or reviewed by, the Chief
Operating Decision Maker.
The Investments segment holds a non-controlling interest in a
logistics services investing business and a baggage handling
business. The Non-Strategic Infrastructure segment specialises in
management, development and realisation of a portfolio of property
assets, including Carlisle Lake District Airport.
The Executive Directors are regarded as the Chief Operating
Decision Maker. The Directors monitor the results of each business
unit separately for the purposes of making decisions about resource
allocation and performance assessment. The main segmental profit
measure is adjusted EBITDA, which is calculated as loss before
interest, tax, depreciation and impairments. Income taxes and
certain central costs are managed on a Group basis and are not
allocated to operating segments.
Group
Year ended 28 Non-Strategic Central
February 2022 Aviation Renewables Investments Infrastructure and Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Revenue
External 23,389 79,650 - 563 1,031 104,633
Internal 22 - - 100 (122) -
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Total revenue 23,411 79,650 - 663 909 104,633
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Adjusted EBITDA (773) 20,308 (390) 3,273 (12,163) 10,255
--------- ----------- ------------ ---------------- ------------------ ---------
Depreciation (10,781) (8,367) - (357) (959) (20,464)
(Impairment)/impairment
reversal - (6,189) - 820 - (5,369)
Finance costs (net) (8,656) (1,660) (1,596) (309) (6,768) (18,989)
-------------------------
(Loss)/profit
before tax from
continuing operations (20,210) 4,092 (1,986) 3,427 (19,890) (34,567)
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Group
Year ended 28 Non-Strategic Central
February 2021 Aviation Renewables Investments Infrastructure and Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Revenue
External 24,611 74,733 - 909 1,151 101,404
Internal 131 - - 150 (281) -
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Total revenue 24,742 74,733 - 1,059 870 101,404
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Adjusted EBITDA (6,075) 10,005 128 (1,660) (9,782) (7,384)
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Depreciation (9,362) (8,635) - (446) (981) (19,424)
(Impairment)/impairment
reversal (656) - - 1,480 - 824
Finance costs (net) (1,429) (2,036) (1,555) (8,346) (4,821) (18,187)
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Loss before tax
from continuing
operations (17,522) (666) (1,427) (8,972) (15,584) (44,171)
------------------------- --------- ----------- ------------ ---------------- ------------------ ---------
Internal revenue above relates to inter-segment revenues that
are eliminated within Group central and eliminations. Intra-segment
revenues are eliminated within each segment.
Discontinued operations
Stobart Air and Propius
In the prior year, the Group bought Stobart Air and Propius to
give the Group effective control over the pre-existing guarantee
obligations it had in respect of those businesses. Accounting for
the recognition of these pre-existing guarantee arrangements
resulted in a loss of GBP58,182,000. The net liabilities recognised
on the subsequent acquisition reflect this loss. The Group
re-acquired equity in Stobart Air and Propius Limited on 27 April
2020 for cash consideration of GBP2,343,000 and deferred contingent
consideration up to a maximum of GBP6,250,000, based on the equity
value achieved after disposal costs, on a realisation of value in
respect of both of the businesses prior to 31 December 2023. The
deferred contingent consideration had a GBPnil fair value. The
businesses were accounted for as 100% subsidiaries due to their
being solely reliant on the Group for funding in addition to the
equity voting rights held.
On 14 June 2021, the Ireland High Court appointed liquidators to
Stobart Air. Due to the liquidation the Stobart Air balance sheet
was deconsolidated in the Group accounts. Net liabilities
deconsolidated totalled GBP15,562,000 and GBP4,255,000 of costs in
relation to the liquidation were incurred, resulting in a profit on
liquidation of GBP11,307,000. On liquidation of Stobart Air there
is no deferred consideration payable.
Following the liquidation of Stobart Air, the results of
Propius, our aircraft leasing business that leased all eight of its
aircraft to Stobart Air, have been presented as discontinued.
Propius is abandoned in line with the IFRS 5 definition of a
discontinued operation. While the results of Propius are presented
as discontinued, in the period up to 28 February 2024 there will be
ongoing finance charges and cash flows in respect of aircraft
leases and cash flows in respect of maintenance obligations, with
the corresponding liabilities remaining on the Group's consolidated
statement of financial position.
The results of Stobart Air and Propius in the year, which were
both separately considered major lines of business, and the profit
on liquidation, have been reported on a single line, net of tax on
the face of the consolidated income statement. The consolidated
income statement for the year ended 28 February 2021 has been
restated on the same basis.
The results of Stobart Air and Propius included in discontinued
operations are as follows.
Results of discontinued operations
of Stobart Air 2022 2021
GBP'000 GBP'000
------------------------------------ -------- ---------
Revenue 3,449 9,034
Other income - 5,695
Operating expenses (4,858) (24,210)
Depreciation - (7,615)
Impairments - (11,431)
Net finance costs 325 330
Results from operating activities
before tax (1,084) (28,197)
------------------------------------ -------- ---------
Loss on acquisition - (17,887)
Profit on liquidation 11,307 -
------------------------------------ -------- ---------
Profit/(loss) before tax 10,223 (46,084)
------------------------------------ -------- ---------
Tax - -
------------------------------------ -------- ---------
Profit/(loss) for the year from
discontinued operations, net of
tax 10,223 (46,084)
------------------------------------ -------- ---------
Results of discontinued operations
of Propius 2022 2021
GBP'000 GBP'000
------------------------------------- --------- ---------
Operating expenses (9,613) (1,014)
Depreciation - (4,775)
Impairments - (11,490)
Net finance costs (2,601) (2,508)
Results from operating activities
before tax (12,214) (19,787)
------------------------------------- --------- ---------
Loss on acquisition - (40,295)
Loss before tax (12,214) (60,082)
------------------------------------- --------- ---------
Tax (90) -
------------------------------------- --------- ---------
Loss for the year from discontinued
operations, net of tax (12,304) (60,082)
------------------------------------- --------- ---------
The above results from discontinued operations are attributable
to the owners of the Company.
The cash flows in relation to the Stobart Air and Propius
operations are as follows.
Cash flows used in discontinued
operations of Stobart Air 2022 2021
GBP'000 GBP'000
--------------------------------------- --------- ---------
Net cash used in operating activities (14,868) (23,065)
Net cash used in investing activities - (69)
Net cash used in financing activities (2,143) (4,764)
Net cash flows for the year (17,011) (27,898)
--------------------------------------- --------- ---------
Cash flows used in discontinued
operations of Propius 2022 2021
GBP'000 GBP'000
--------------------------------------- --------- ---------
Net cash used in operating activities (2,598) (6,435)
Net cash used in investing activities (7,808) -
Net cash used in financing activities (12,241) (10,222)
Net cash flows for the year (22,647) (16,657)
--------------------------------------- --------- ---------
The results and cash flows of Stobart Air and Propius
discontinued operations included in the above tables are after the
elimination of intra-group transactions between Stobart Air and
Propius.
The effect of the deconsolidation of Stobart Air on individual
assets and liabilities is as follows.
GBP'000
----------------------------------- ---------
Inventories 3,096
Trade and other receivables 6,377
Cash and cash equivalents 362
Trade and other payables (12,992)
Lease liabilities (7,265)
Provisions (3,356)
Foreign currency exchange reserve (1,784)
Net assets and liabilities (15,562)
----------------------------------- ---------
Disposal of Stobart Rail Limited
In the prior year, on 14 July 2020 the Group divested of Stobart
Rail Limited (Stobart Rail) to Bavaria Industries Group AG for
initial cash consideration of GBP1,000 and contingent consideration
with a fair value of GBP331,000. The net assets disposed totalled
GBP8,902,000 and GBP940,000 costs were incurred, resulting in a
loss on disposal of GBP9,510,000.
On 30 June 2021 the contingent consideration, which related to a
single legacy contract, was settled with the Group receiving
GBP170,000. The remaining contingent consideration held on the
statement of financial position was released to the consolidated
income statement.
The operations of Stobart Rail Limited represented a separate
major line of business. The results of the operations, along with
the loss on disposal, are reported as part of the single line loss
from discontinued operations, net of tax on the face of the
consolidated income statement. A summary of Stobart Rail results
included in discontinued operations is as follows:
Results of discontinued operations 2022 2021
GBP'000 GBP'000
------------------------------------- -------- ---------
Revenue - 6,309
Operating expenses - (7,902)
Depreciation - (854)
Net finance costs - (22)
Results from operating activities
before tax - (2,469)
------------------------------------- -------- ---------
Loss on disposal (305) (9,510)
------------------------------------- -------- ---------
Loss before tax (305) (11,979)
------------------------------------- -------- ---------
Tax - 120
------------------------------------- -------- ---------
Loss for the year from discontinued
operations, net of tax (305) (11,859)
------------------------------------- -------- ---------
The loss from discontinued operations of GBP305,000 (2021:
GBP11,859,000) is attributable to the owners of the Company.
The cash flows in relation to this operation have been included
in the following table.
Cash flow used in discontinued
operations 2022 2021
GBP'000 GBP'000
--------------------------------------- -------- --------
Net cash generated from/(used in)
operating activities 136 (769)
Net cash used in investing activities - (989)
Net cash used in financing activities - (1,736)
Net cash flows for the year - (3,494)
--------------------------------------- -------- --------
Summary of discontinued operations recognised within the
consolidated income statement
2022 2021
GBP'000 GBP'000
------------------------------------- --------- ----------
Stobart Air 10,223 (46,084)
Propius (12,304) (60,082)
Stobart Rail (305) (11,859)
------------------------------------- --------- ----------
Loss for the year from discontinued
operations, net of tax (2,386) (118,025)
------------------------------------- --------- ----------
Summary of cash flows from discontinued operations
2022 2021
GBP'000 GBP'000
----------------------------- --------- ---------
Stobart Air (17,011) (27,898)
Propius (22,647) (16,657)
Stobart Rail 136 (3,494)
----------------------------- --------- ---------
Net cash flows for the year (39,522) (48,049)
----------------------------- --------- ---------
Financial assets and liabilities
Loans and borrowings 2022 2021
GBP'000 GBP'000
--------------------------------- --------- ---------
Non-current
Obligations under leases 98,677 122,116
Convertible debt (net of costs) 118,862 -
--------------------------------- --------- ---------
217,539 122,116
--------------------------------- --------- ---------
Current
Exchangeable bonds 52,385 52,010
Obligations under leases 24,714 36,792
Revolving credit facility (net
of arrangement fees) - 52,329
77,099 141,131
--------------------------------- --------- ---------
Total loans and borrowings 294,638 263,247
--------------------------------- --------- ---------
Cash (52,738) (12,408)
--------------------------------- --------- ---------
Net debt 241,900 250,839
--------------------------------- --------- ---------
Included within the cash balance of GBP52,738,000 is
GBP14,444,000 of ring-fenced cash for use in London Southend
Airport and its subsidiaries under the terms of the convertible
debt agreement with Carlyle Global Infrastructure Opportunity Fund,
and GBP945,000 for use in the Employee Benefit Trust.
Reconciliation of movements of liabilities to cash flows arising
from financing activities
Liabilities Exchangeable Revolving Convertible Obligations Total
bond credit debt under leases
facility
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------- ---------- ------------ -------------- ---------
Balance at 1 March
2021 52,010 52,329 - 158,908 263,247
Changes from financing
cash flows:
Additional loans - - 125,000 - 125,000
Net cash repaid - (55,000) - - (55,000)
Cash outflow from debt
issue costs - (3,165) (13,541) - (16,706)
Principal elements
of lease payments -
continuing operations - - - (17,026) (17,026)
Principal elements
of lease payments -
discontinued operations - - - (11,470) (11,470)
Interest paid - continuing
operations (1,460) (3,624) - (3,908) (8,992)
Interest paid - discontinued
operations - - - (2,913) (2,913)
Total changes from
financing cash flows (1,460) (61,789) 111,459 (35,317) 12,893
------------------------------ ------------- ---------- ------------ -------------- ---------
Release of deferred
issue costs 375 4,411 998 - 5,784
Reclass to other debtors - 1,425 - - 1,425
New leases entered
into - - - 5,744 5,744
Termination of lease - - - (6,707) (6,707)
Unwind of discount - - - 171 171
Disposal of subsidiary
undertaking - - - (7,265) (7,265)
The effect of changes
in foreign exchange
rates - - - 1,077 1,077
Non-cash interest accruals 1,460 3,624 6,405 6,780 18,269
Balance at 28 February
2022 52,385 - 118,862 123,391 294,638
------------------------------ ------------- ---------- ------------ -------------- ---------
Deferred issue costs
included in the above
liabilities 814 - 12,542 - 13,356
------------------------------ ------------- ---------- ------------ -------------- ---------
Deferred issue costs associated with the revolving credit
facility (RCF) of GBP1,425,000 are held within trade and other
receivables in the statement of financial position as the RCF is
undrawn at year end.
The GBP6,707,000 termination of lease primarily relates to the
exit of the Judd House lease and the termination of aircraft leases
in Stobart Air.
Liabilities Exchangeable Revolving Obligations Total
bond credit facility under leases
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------------- ----------------- -------------- ---------
Balance at 1 March 2020 51,689 74,757 118,811 245,257
Changes from financing cash
flows:
Net cash repaid - (20,000) - (20,000)
Cash outflow from debt issue
costs (51) (4,286) - (4,337)
Principal elements of lease
payments - continuing operations - - (24,018) (24,018)
Principal elements of lease
payments - discontinued
operations - - (187) (187)
Interest paid - continuing
operations (1,460) (2,243) (1,742) (5,445)
Interest paid - discontinued
operations - - (3,942) (3,942)
Total changes from financing
cash flows (1,511) (26,529) (29,889) (57,929)
------------------------------------ ------------- ----------------- -------------- ---------
Release of deferred issue
costs 372 1,858 - 2,230
New leases entered into - - 3,408 3,408
Termination of lease - - (63) (63)
Unwind of discount - - 141 141
Acquisition of subsidiary - - 64,884 64,884
Disposal of subsidiary undertaking - - (1,707) (1,707)
The effect of changes in
foreign exchange rates - - (4,752) (4,752)
Non-cash interest accruals 1,460 2,243 8,075 11,778
Balance at 28 February
2021 52,010 52,329 158,908 263,247
------------------------------------ ------------- ----------------- -------------- ---------
Deferred issue costs included
in the above liabilities 1,189 2,671 - 3,860
------------------------------------ ------------- ----------------- -------------- ---------
During the year the current bank lenders signed a new GBP20m RCF
which matures on 1 February 2023. This facility replaced the old
GBP120m RCF which was fully repaid in the year. The GBP20m variable
rate committed RCF, with end date February 2023, uses a variable
rate plus a similar margin to the old RCF and has a simplified
covenant structure which reflects the forecast performance of the
business going forward. Under the new RCF, Esken Limited and all
material subsidiaries, excluding London Southend Airport Company
Limited (LSA), have charged security to the lenders via a
debenture, and the material subsidiaries, excluding LSA, are also
guarantors and obligors in relation to the facility agreement.
There are fixed charges over land and properties including Widnes,
Runcorn and Carlisle Lake District Airport, in addition to floating
charges and charges over shares. The RCF was undrawn (2021:
GBP55,000,000) at the year end.
Esken Limited provides support to its subsidiaries where
required. Examples of support include intercompany funding
arrangements and the provision of guarantees in relation to
financing lines provided by a number of lenders. In addition, one
Renewables contract has a covenant relating to the market capital
of Esken Limited, where a breach would be remedied by additional
letters of credit. The Group was in compliance with, or received
waivers for, all financial covenants throughout both the current
and prior year and subsequent to the year end.
Convertible debt
On 26 August 2021, the Group signed an agreement with Carlyle
Global Infrastructure Opportunity Fund (CGI) for a GBP125m
investment in LSA through a 30% convertible debt instrument (loan).
The loan can be converted by CGI at any time following this date
until maturity, being seven years. If CGI does not convert prior to
maturity, the loan is repayable at the greater of an amount
achieving 10% IRR for CGI or GBP193.8m (Repayment Price). Interest
accrues at 8% per annum to be paid in cash or rolled into the
principal, depending on cash generated by LSA in the previous year
and certain minimum liquidity headroom requirements. In addition,
2% per annum PIK interest is rolled into the principal. The loan
includes three derivatives in relation to conversion, however,
these have been accounted for as one single compound derivative as
they are not considered independent of each other.
The derivative was fair valued at GBP1,005,000 on issue of the
loan and is revalued at each reporting date, with any gain or loss
recognised in finance costs in the consolidated income statement.
The host contract is measured at amortised cost. The derivative
fair value on issue is different to that disclosed in the Interim
Statement following an amendment in calculation methodology, in
line with the year-end valuation.
The fair value of the derivative is arrived at using the income
approach which values the underlying equity value of LSA and the
fair value of the host contract, forming inputs into the valuation
model. The equity value and fair value of host contract have been
calculated by applying a probability weighted average to seven
scenarios above and below the base case cashflows per LSA's latest
5-year business model (Base Case), flexing passenger forecasts
adopted in the Base Case scenario. In each of the scenarios, 30% of
LSA's equity value is compared to the Repayment Price to assess the
likelihood of conversion. At 28 February 2022, the compound
derivative was valued at GBP1,088,000 which represents the
difference between the fair value of the convertible debt and the
host loan, presented in the convertible debt line above. The
derivative valuation is expected to increase materially if Base
Case forecasts are substantially exceeded. If LSA performs below
Base Case forecasts, the valuation of the derivative is expected to
reduce towards nil.
Exchangeable bonds
On 3 May 2019, the Group placed GBP53.1m of secured guaranteed
exchangeable bonds (Bonds). The Bonds have a five-year maturity,
bear interest at 2.75% per annum and are exchangeable into ordinary
shares of 1p each in the capital of Logistics Development Group plc
(LDG). The bondholders have an unconditional right to require the
Group to settle the bonds by giving the bondholders shares in LDG
at any time. The Directors have obtained legal advice that confirms
the liquidation of Stobart Air does not result in additional rights
to redemption of the Bonds. The Bonds have a May 2024 maturity,
with repayment being the difference between the GBP53.1m gross
Bonds and shares in LDG into which the Bonds are convertible. At 28
February 2022 this amounted to GBP45.7m.
Cyrus put option
The Group entered into a put option with fellow Connect Airways
shareholder Cyrus Capital Partners (Cyrus) on 11 January 2019. This
agreement gave Cyrus the option to exchange GBP23m of second
ranking six-year 8% RCF debt with Connect Airways, for equity
shares in Esken Limited at 247p per share. The option was
exercisable two years following the acquisition of Flybe plc by
Connect Airways and required 30 days' notice. On 7 May 2021 the put
option was exercised and 6m shares were issued. The exercise meant
that the associated financial liability had a fair value of GBPnil
and GBP1,581,000 was released and presented within finance income
(2021: GBP458,000 cost) in the consolidated income statement. The
share issue resulted in an increase in share capital and an
increase in retained deficit.
Provisions
Site restoration Onerous Tax Litigation Remediation Maintenance Total
contracts and claims provision reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----------------- ----------- -------- ------------ ------------ ------------ ---------
At 1 March 2021 3,036 508 16,136 3,781 4,466 20,064 47,991
Provisions used - (585) (26) (1,443) - (3,311) (5,365)
Provisions made - 2,503 - 2,038 - 8,034 12,575
Provisions reversed
during the year (1,862) (426) (9,514) (312) - - (12,114)
Reclassification
to corporation
tax - - (5,922) - - - (5,922)
Reclassification
to other payables - - (674) - - - (674)
Unwind of discount 76 21 - - - - 97
Currency retranslation - - - (6) (5) 731 720
Disposal of
subsidiary - - - (963) (519) (1,873) (3,355)
----------------------- ----------------- ----------- -------- ------------ ------------ ------------ ---------
At 28 February
2022 1,250 2,021 - 3,095 3,942 23,645 33,953
----------------------- ----------------- ----------- -------- ------------ ------------ ------------ ---------
Analysis of
provisions:
Current 1,250 1,491 - 3,095 3,942 10,896 20,674
Non-current - 530 - - - 12,749 13,279
----------------------- ----------------- ----------- -------- ------------ ------------ ------------ ---------
Site restoration
The Group leased a long leasehold property which is currently
unoccupied, in respect of which it had annual dilapidation and
holding costs obligations. Post year end, on 3 March 2022 an
agreement was signed with the owners of the property for the Group
to exit the lease. The exit resulted in the release of dilapidation
obligations of GBP1,862,000 to the consolidated income statement
within other income. The remaining GBP1,250,000 held on the
statement of financial position at the year end was paid in March
2022.
Onerous contracts
The exit of the property lease also led to the release of
holding cost provisions of GBP398,000 to the consolidated income
statement within other income.
Following the liquidation of Stobart Air there was a review of
unavoidable costs related to the eight ATR aircraft in Propius
prior to redelivery which led to the Group making a provision of
GBP2,503,000. During the year, GBP517,000 of this provision has
been used. The provision is separate from the maintenance provision
held for the aircraft, see following.
Tax
During the year ended 28 February 2022, the Group has released
GBP9,514,000 from provisions, following a reassessment of all open
tax enquiries and settlements with HMRC. The Group changed tax
advisors in late 2020 and since this appointment there has been an
increase in engagement with HMRC which has provided a better
understanding and clarity regarding the open enquiries and timing
of settlements. Consequently, remaining uncertain tax provisions of
GBP5,922,000, have been reclassified to corporation tax payable and
GBP674,000 has been reclassified to other payables.
Litigation and claims
The balance at the year end primarily relates to a provision for
part 1 claims relating to London Southend Airport. During the year
claims totalling GBP1,340,000 have been settled and, following
remeasurement, an additional GBP1,000,000 has been provided for. It
is expected that these claims will be settled within 12 months.
During the year GBP1,038,000 has been provided for other legal
costs and claims around the Group. Subsequent to the year end a
judgement on one legal case was issued, the outcome is fully
covered by the provision.
Remediation provision
This relates to the estimated cost required for remediation
works on leased land in Widnes. The Group commissioned surveys by
independent environmental and sustainability specialists, received
in November 2021 and April 2022, providing options for the scope of
work, methods and estimates of cost of remediation. The surveys
indicated a range of GBP2.1m to GBP5.7m depending on the scope and
method of remediation. Taking into account uncertainties over the
final cost, scope and method of remediation required, in addition
to future discussions with appropriate regulators, management
believes that the current provision of GBP3.9m is appropriate. It
is anticipated that works on the site will begin within the next 12
months and so the provision has been presented as a current
liability.
In addition, it was anticipated that the land would be used in
the Renewables division, but during year the Group reassessed its
strategy for the use of the land and concluded that this was not
viable. Consequently, the Group has considered the recoverable
amount of the right-of-use asset and deemed it immaterial resulting
in an impairment of GBP6.2m.
Maintenance reserves
Following the liquidation of Stobart Air, an update of the
maintenance reserves was required to cover all amounts payable on
the eight ATR aircraft in Propius prior to redelivery. This was the
main driver for the GBP8,034,000 maintenance provision made in the
period with all aircraft grounded. In prior years, when the
aircraft were operational, the reserves increased over time based
on usage and time to next overhaul. The estimate of maintenance
reserves is sensitive to changes in market prices and the level of
wear on specific components once in the process of overhaul. The
provisions represent the estimated cost of ensuring the aircraft
are kept in a suitable condition for when they are handed back at
the end of the leases including redelivery costs. The impact of
discounting is not material and has not been recognised. The
current liability element relates to work on the first aircraft to
be handed back and all non-current costs are expected to be
incurred prior to the year ending 29 February 2024.
The estimated proportion of the provision is GBP10.0m and
largely relates to airframe and propeller blade costs. The key
estimates include the scrap rate of propeller blades, currently 15%
(c.GBP1.3m). A 500 basis points change in this rate would lead to a
GBP0.4m change in provision. Airframe checks include significant
estimation uncertainty, with GBP0.7m relating to an uplift in cost
due to the fact the aircraft are grounded. Total estimation within
airframe costs is GBP7.1m. The condition of each aircraft across
the fleet is not expected to significantly differ due to their age
and the hours that each has flown. The key driver to all provision
estimation is the work required to put the aircraft into a
condition defined by the leases prior to redelivery, outside of the
fixed cost work required. If all estimated costs increased by 20%,
this would drive a material increase in provision of c.GBP2.0m.
Contingent liabilities
Liability under financial guarantees exist across the Group and
a number of these liabilities are no longer considered remote.
The Group is subject to a number of ongoing unprovided legal
cases that will be vigorously defended. The Group considers that
the net liability in respect of these claims, if any, is unlikely
to exceed approximately GBP2m. The cases are expected to be settled
within the next 12 months.
Post balance sheet events
There were no post balance sheet events other than a judgement
on one legal case.
Notes to the consolidated cash flow statement
Restated
Year ended Year ended
28 February 28 February
2022 2021
GBP'000 GBP'000
Loss before tax from continuing
operations (34,567) (44,171)
Adjustments to reconcile loss before
tax to net cash flows:
Non-cash:
Realised profit on sale of property,
plant and equipment (308) (98)
Share of post-tax profits of associates
and joint ventures accounted for
using the equity method 356 218
Loss on disposal of assets held
for sale - 208
Depreciation of property, plant
and equipment 20,464 19,423
Finance income (2,239) (2,396)
Finance costs 20,744 19,599
Release of grant income (788) (479)
Release of deferred premiums - (167)
Impairment/(impairment reversal) 5,369 (824)
Charge for share-based payments 285 81
(Gain)/loss on swaps mark to market
valuation (93) 42
(Decrease)/increase in retirement
benefits and other provisions (5,018) 226
Working capital adjustments:
Increase in inventories (144) (28)
Decrease in trade and other receivables 6,625 4,213
(Decrease)/increase in trade and
other payables (7,840) 5,444
Cash generated from continuing
operations 2,846 1,291
----------------------------------------- -------------- -------------
Related parties
Relationships of common control or significant influence
W A Tinkler was a related party until 14 June 2018 when he
ceased to be a Director of the Group. The amounts outstanding are
unsecured and were entered into under normal commercial terms.
WA Developments International Limited is owned by W A Tinkler.
There were no related party sales or purchases during the current
or prior years. At the year end GBP60,000 (2021: GBP60,000) was due
from WA Developments International Limited. As of 14 June 2018, WA
Developments International Limited was no longer a related
party.
Apollo Air Services Limited is owned by W A Tinkler. There were
no related party sales or purchases during the current or prior
years. At the year end GBP83,000 (2021: GBP83,000) was owed by the
Group and GBP46,000 (2021: GBP46,000) was owed to the Group by this
company. As of 14 June 2018, Apollo Air Services Limited was no
longer a related party.
WA Tinkler Racing is owned by W A Tinkler. There were no related
party sales or purchases during the current or prior years. At the
year end GBP26,000 (2021: GBP26,000) was owed to the Group. As of
14 June 2018, WA Tinkler Racing was no longer a related party.
During the current and prior years, the Group made no purchases
from or sales to Stobart Capital Limited, a business part-owned by
W A Tinkler, relating to investment management. At the year end
GBP6,000 (2021: GBP6,000) was owed to the Group. As of 14 June
2018, Stobart Capital Limited was no longer a related party.
Speedy Hire plc is a related party from 1 June 2019, when David
Shearer became Non-Executive Chairman of the Group, as he is also
Non-Executive Chairman of Speedy Hire plc. During the year, the
Group made purchases of GBP3,000 (2021: GBP4,000) relating to
equipment hire of which GBPnil (2021: GBP1,000) was owed by the
Group at the year end.
Buchanan Shearer Associates LLP is a related party from 1 June
2019, when David Shearer became Non-Executive Chairman of the
Group, as he is also a designated member of Buchanan Shearer
Associates LLP. During the year, the Group made purchases of
GBP207,000 including VAT (2021: GBPnil) relating to advisory
services (GBP180,000) and recharge of expenses (GBP27,000). At the
year end, GBPnil (2021: GBPnil) was owed by the Group.
Associates and joint ventures
The Group has loans, not part of the net investment, outstanding
from its associate interest, Mersey Bioenergy Holdings Limited, of
GBPnil (2021: GBPnil) at the year end due to the loans being fully
written down. The interest outstanding at the year end, net of
amounts provided, was GBPnil (2021: GBPnil). The loans are
unsecured and have a ten-year term ending in November 2024.
During the year, the Group made sales of GBP7,411,000 (2021:
GBP5,937,000) to Mersey Bioenergy Limited (a subsidiary of Mersey
Bioenergy Holdings Limited) relating to the sale of material. At
the year end, GBP220,000 (2021: GBP507,000) was owed to the
Group.
There were no other balances between the Group and its joint
ventures and associates during the current or prior year. All loans
are unsecured and all sales and purchases are settled in cash on
the Group's standard commercial terms.
Alternative performance measures
In the reporting of financial information, the Directors have
adopted various alternative performance measures (APMs). These
measures are not defined by International Financial Reporting
Standards (IFRS) and therefore may not be directly comparable with
other companies' APMs.
APMs should be considered in addition to, and are not intended
to be a substitute for, or superior to, IFRS measurements. Non-GAAP
APMs are used as they are considered to be both useful and
necessary as well as enhancing the comparability of information
between reporting periods, by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the Group's performance.
Consequently, APMs are used by the Directors and management for
internal performance analysis, planning, reporting and
incentive-setting purposes. The presentation of these measures
facilitates comparability with other companies, although
management's measures may not be calculated in the same way as
similarly titled measures reported by other companies.
Adjusted EBITDA
Adjusted EBITDA is the key profitability measure used by
management for performance review in the day-to-day operations of
the Group. Adjusted EBITDA represents loss before interest, tax,
depreciation and impairments. Refer to Segmental information note
for reconciliation to statutory loss before tax.
Headroom
This is the sum of cash per the consolidated statement of
financial position plus the GBP20m revolving credit facility which
was undrawn at the year end. It shows the amount of cash that can
be drawn on by the Group at short notice.
Net debt
Net debt is defined as the sum of obligations under leases,
revolving credit facility, exchangeable bonds and convertible debt,
less cash and cash equivalents. See Financial assets and
liabilities note for reconciliation.
Gearing
This is defined as net debt, as defined above, divided by Group
shareholders' equity per the consolidated statement of financial
position.
Propius lease and aircraft-related costs
This is the sum of cash outflows related to the ATR aircraft in
Propius to be paid in FY23 and FY24. It consists of net lease
payments, less deposit paid, of GBP21.4m, maintenance outflows of
GBP23.6m and other unavoidable aircraft costs of GBP2.0m.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR BIGDUDDDDGDS
(END) Dow Jones Newswires
May 25, 2022 02:00 ET (06:00 GMT)
Grafico Azioni Esken (LSE:ESKN)
Storico
Da Set 2024 a Ott 2024
Grafico Azioni Esken (LSE:ESKN)
Storico
Da Ott 2023 a Ott 2024