In its financial results for the year ended 29 February 2020, Stobart Group has announced that it will withdraw from the Rail & Civils business.
David Shearer, non-executive chairman, said in his report: “The Rail & Civils business was impacted by continuing costs on a legacy contract which necessitated a further provision in the year. This business is unlikely to generate the appropriate returns for shareholders given the risks and we have decided to withdraw from this sector during the course of FY21.”
He also announced that, in view of the “confusion which existed with our stakeholders around the Stobart name”, the Group will, over the next three years, remove the use of the Stobart name from all operations. The Stobart brands have recently been sold to Eddie Stobart Logistics plc for £10 million.
While the two core businesses, Energy and Aviation, both made a profit, the overall performance of the Group was affected by Connect Airways and its subsidiary Flybe going into administration, with a proposed rescue being called off due to the Covid-19 epidemic. The aircraft leasing business, sold into Connect as part of the consortium deal to acquire Flybe, has been bought back from the administrator.
To counter these exceptional losses, the Group has arranged a combination of additional bank facilities of £40 million and new equity in excess of £80 million, which will allow it to stabilise its financial position while maintaining its operational capability through the anticipated crisis period.
Group CEO Warwick Brady said: “We are today announcing a clear plan to stabilise the business and provide a secure platform to move forward. We have a cost-efficient proposition for airlines and will further develop our passenger-focused airport experience that seeks to maintain passenger flow and provide enhanced customer confidence. Therefore, we will focus our investment and our business in this asset by seeking to dispose of our non-core businesses and, in due course, monetise Stobart Energy.
“The launch of the capital raise that we have announced today will provide the Group with the financial resilience necessary in the current environment and ultimately to position the business for success in the post COVID environment.”
Update 23 June 2020
A company spokesperson has announced on Twitter: “We have a number of identified interested parties who are better placed to invest in our Rail & Civils division. It’s an evolving and exciting time and the potential investment will help stabilise and grow the business through these difficult times of COVID, lockdown and beyond.”
So perhaps a change in ownership is on the cards?