Biomass deal is big boost for Stobart

STOBART Group, the Cumbria-based energy to aviation and infrastructure group, has signed its third major biomass supply contract in four months.

The latest contract in Rotherham, South Yorkshire, is with Brite Partnership (North East) and will see the Carlisle headquartered group supply and transport 5.2m tonnes of waste wood to a 40MWe biomass plant over the term of the contract, which starts in 2017.

“This latest agreement gives clear visibility of the biomass tonnage the group will be supplying by 2017 of 1.75m p.a. against our target of 2m, with further projects in the pipeline,” the company said.

Stobart Group is not involved in the financing of the project, although it expect the project to achieve financial close in the next two weeks.

Richard Butcher, chief executive Stobart Energy & Infrastructure, said: “This agreement means that in the last four months alone we have secured additional supply volumes for the Stobart Energy division totalling some 750,000 tonnes per annum from 2017 onwards through three long-term, index-linked contracts.

“We continue to strengthen our market leading position in the biomass supply market and are encouraged by the momentum in this business. The group has quickly established itself as the fuel supplier of choice in the rapidly developing biomass power market.”

Also updating the markets on its performance, the group said that underlying trading for its operating businesses is in line with management expectations.

It said the trio of major biomass fuel supply contracts secured recently provide its energy division with “significant revenue” over the life of the agreements.

Regarding its aviation division, Stobart said passenger numbers at London Southend Airport increased by 9% to 1.09m during the year but expects passenger numbers on existing operations are likely to be slightly lower in the next six months.

Stobart Air, of which Stobart Group owns 45%, has recorded increased passenger numbers for 18 consecutive months up to December 2014, when compared with the equivalent month in the prior year.

The rail division continues to grow revenues with external customers on railway related projects, the company said.

The division has recently been awarded a contract by Burmeister & Wain Scandinavian Contractor AS for civils work on the biomass plant at Widnes and we will be constructing a dryer facility for the Group at Widnes with a combined contract value of around £15m over the next 18 months.

In addition, work has started on the construction of the £12m distribution centre at Carlisle Airport for completion in September 2015, and work is underway on ground investigation works and design for potential future airport developments.

Andrew Tinkler, chief executive, said: “This has been another year of growth for our Energy and Aviation divisions. The group has recently secured three major biomass fuel supply contracts. As a result we are now over 85% toward our target of supplying two million tonnes per annum by 2017. Our investment in London Southend Airport is now largely complete and we are well placed to grow the profitability of that business.

“The airport serves over one million passengers per year, and as a result of our recent investment, now has capacity in its terminal to serve five million passengers. The Infrastructure and Rail divisions are both performing well with opportunities to develop. We have realised £26.4m in cash from property sales in the past year and we have plans for further disposals in the year ahead.”

Stobart’s results for the year to February 28 are expected to be announced on May 14.