Stobart Group: COVID-19 Trading Update
Stobart Group provides the following update regarding the measures it has taken to date to safeguard its business operation in response to the COVID-19 outbreak.
The Group owns and operates two valuable growth businesses in London Southend Airport and Stobart Energy. The Board and management team have moved swiftly and taken proactive steps to protect its liquidity and cashflow.
Actions taken by Stobart Group to date include;
- A freeze on all capital expenditure spend other than where it is considered critical for safety reasons. All discretionary spend has also been deferred;
- Stobart Group has utilised the UK Government’s Job Retention Scheme to put on furlough c50% of Stobart Group’s 1,500+ employees as of 1 April 2020. All employees in continuing roles that allow them to work from home are doing so;
- The Board and Senior Leadership have agreed to 20% pay reductions and all other non-furloughed management have accepted 10% pay reductions;
- A recruitment freeze has been in place since early March and all variable pay awards have been deferred to August 2020 at the earliest;
- Stobart Group has utilised all measures made available by Government to help conserve cash.
These steps have been taken both to maintain the operational capability of our core businesses and ensure they are well placed to gear back up when the recovery takes place. At all times we have committed, as a responsible business, to follow all Government advice. The safety and wellbeing of our staff and the communities we operate in have been at the forefront of the Board and management’s thinking.
The cumulative effect of these actions is to preserve the Group’s liquidity and provide cash headroom. Given the level of current uncertainty, particularly regarding the potential duration of the crisis, the Board is also taking prudent steps to explore further funding options.
The Board has determined it is not possible to provide financial guidance for the Full Year at present and is withdrawing all previously made guidance.
London Southend Airport’s airline partners have, for the most part, suspended operations, with airlines taking the opportunity to ground fleets at London Southend Airport. Over 20 aircraft are currently based on the airport’s stands. Wizz Air continues to operate a reduced service of three weekly flights to Bucharest. Loganair continue to operate flights to Aberdeen and Derry three times a week, and these Wizz Air and Loganair operations are served by a skeleton airport staff.
The airport’s global logistics operation continues to operate as normal. The importance of maintaining the logistics network in the UK means that people working at that operation have been assigned Key Worker status. Strict safety protocols and procedures are in place throughout our operations in order to protect people working there. The Holiday Inn hotel at the airport remains open and is providing accommodation for Key Workers and we are seeking further opportunities to support community groups.
Stobart Energy is currently maintaining its operation with renewable energy plants continuing to require waste wood fuel in order to generate circa 2% of the UK’s electricity needs. The importance of supplying fuel to support these plants has meant drivers and associated employees have been assigned Key Worker status.
The key risk to Stobart Energy’s ongoing operations is the availability of waste wood. The significant slowdown in construction alongside the closure of Local Authority-operated Household Waste & Recycling Centres has reduced the volume of new waste wood being made available. The low levels of available waste wood may impact on future gate fee pricing for an extended period.
Stobart Energy is engaged with its renewable energy plant partners to discuss options to accept different specifications of waste wood fuel. As a precautionary step, Force Majeure or Pre Force Majeure notices have been issued to the majority of our major renewable energy plant partners.
The division is further engaged with the UK Government to request the reopening of Household Waste & Recycling Centres and recommend that all available waste wood is prioritised for the use in renewable energy plants.
Warwick Brady, Chief Executive, Stobart Group said,
“The challenges presented by the rapid spread of the COVID-19 virus have been significant. However, I am immensely proud and humbled by the response of our people to this global crisis. We have acted at pace to put in place steps to safeguard our business in the immediate term, and our people have consistently understood and supported the actions we have taken.
“Despite the current challenges presented by the COVID-19 virus, we continue to own and operate aviation and energy assets with significant underlying value. There remain significant medium and long-term opportunities to further increase the value of the assets for our stakeholders.
“We are maintaining regular communication with our partners and ensuring we are well placed to get back to full operation quickly once this exceptionally challenging time has passed.”
The person responsible for arranging the release of this announcement on behalf of Stobart Group is Louise Brace, Company Secretary.
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