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Business Performance Review
Business Performance Review
Eddie Stobart
The Eddie Stobart road transport and warehousing business has
contributed revenue of £449.9m (2010: £381.5m) and
underlying profit before tax of £33.6m (2010: £25.6m).
This growth has resulted from the development of new
business and contracts in the year. In the UK we secured major
new chilled business with Tesco at Widnes (as a result of the
development of the 500,000 sq. ft. chilled facility for them),
a new contract with AG Barr and enhanced business with
Britvic whilst volume continued to grow with Unilever.
Our Irish business has grown rapidly to including a major
contract with Tesco and we have established our Spanish rail
and road service which has led to good opportunities in the UK.
We have written off exceptional costs of £2.7m of investment
in establishing our operations in these new territories.
The division suffered disruption caused by the extreme weather
conditions in the UK in November and December 2010.
Additional costs to the business of £1.8m are disclosed as an
exceptional item. Our customers have expressed their huge
appreciation for our determined efforts in continuing to work
though this period in the run-up to Christmas.
In March 2010 we secured a 50% investment in newly set up
Stobart Biomass Products Limited for £30m, half in shares and
half in cash. This joint venture in conjunction with AW
Jenkinson has been formed to distribute biomass products to
the fast-growing UK renewable energy market. Our share of
the profits of this business are included in the Eddie Stobart
division in the year.
Stobart Rail
The Rail division includes two operations: Infrastructure
Engineering and Rail Freight Transportation. The division
contributed revenue of £53.0m (2010: £64.8m) and underlying
profit before tax of £3.7m (2010: £5.0m).
The rail infrastructure engineering business was depressed due
to the cutbacks in expenditure by Network Rail and other
major customers. Strict cost control measures have been
implemented and we believe that the market will recover but
the timescale is difficult to predict.
The rail freight transport business remains strong and profitable
with demand driven by commercial factors and environmental
impact reduction. We have secured a
€
2.7m Marco Polo grant
for the Valencia Rail service.
£23.3m (2010: £19.1m) of revenue and £1.1m (2010: £1.0m)
of profit was earned on Group development projects including
the major developments of the control tower and railway station
at London Southend Airport. This valued engineering enhances
the value of our assets and reduces costs and disruption
through knowledgable tendering and effectively working
around our existing operations. Revenue and profit is
eliminated on consolidation and this value will not be realised
until sale of the assets.
Stobart Ports
The Ports division has contributed revenue of £13.7m (2010:
£13.9m) and underlying profit before tax of £2.0m (2010:
£3.2m before profit on disposal of Widnes assets of £8.2m).
The current year results include the terminal site rental costs
following the sale and leaseback of the site at the end of the
previous year but this cost is partly offset by the interest
savings after the related development loan was fully repaid
on disposal of the property. If the loan had been refinanced
the interest costs would have risen significantly.
The site is well positioned to gain from further development of
business in the immediately surrounding areas including our
adjacent development land. The terminal is capable of operating
at much higher volumes with relatively low incremental costs.
A £4.5m Regional Growth Fund was approved in April 2011 for
the development of the Stobart site in Widnes.
The Port of Weston at Runcorn is being fully used for outside
storage in the year.
Stobart Air
The Air division contributed revenue of £6.8m (2010: £6.6m)
and underlying profit before tax of £0.2m (2010: £0.2m).
The development of London Southend Airport is progressing
well, the new control tower and on-site railway station are
completed and development of the new terminal and runway
are underway and are expected to be complete in Autumn. We
have secured funding for the capital expenditure required to fully
develop the airport.
In November 2010 we took a 5% interest in Aer Arann and in
March 2011 Aer Arann flights commenced from London
Southend Airport to Waterford and Galway.
At Carlisle Airport, a revised planning application has been
submitted and we await the decision in Summer 2011.
Stobart Properties
Certain associate and joint venture property related assets
were reclassified to continuing operations from discontinued
operations in the year due to the focus on property development
and ownership after the recent restructuring. Following this
reclassification the results of these assets have been included in
the Stobart Properties business segment.
Stobart Properties contributed revenue of £0.3m (2010: £0.2m)
and underlying profit before tax of £2.9m including an increase
in carrying value of units in One Plantation Place of £2.0m. The
prior year underlying profit before tax of £7.4m includes net
profit on disposal of Widnes assets of £8.2m which had been
included in the Ports divisional profit in the prior year but has
been included in the Properties division this year for better
comparison of property asset related profits.
There are no discontinued activities in the current year.
Divisional Performance Review