TIDMESKN
RNS Number : 9761U
Esken Limited
29 November 2023
Prior to publication the information communicated in this
announcement was deemed by the Company to constitute inside
information for the purposes of article 7 of the Market Abuse
Regulations (EU) No 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations No 2019/310 ('MAR').
With the publication of this announcement, this information is now
considered to be in the public domain.
29 November 2023
Esken Limited
("Esken" or the "Group")
Results for the six months ended 31 August 2023
Esken Limited, the aviation and renewables group, today
announces its unaudited interim results for the six months ended 31
August 2023.
David Shearer, Executive Chairman of Esken, said
"The Board is pleased that shareholders have approved the
disposal of Esken Renewables and this transaction is expected to
complete on or around 1 December 2023. The sale will generate net
proceeds of GBP78.5m after costs, which will be used to repay the
term loan that was secured against certain Group assets, provide
funding for a wind up of the legacy pension scheme and generate
some additional liquidity in the short term. The disposal, in line
with the results of the strategic review, has been completed
despite a challenging market backdrop and will lead to a
significant reduction in Group indebtedness at a time of high
interest rates as well as removing a number of guarantees given on
long-term contracts.
Following the disposal, the main operating business will be the
Aviation division, primarily London Southend Airport (LSA). The
airport has benefitted during the summer season from the industry's
strong passenger demand, which has seen the other London airports
return to pre-pandemic passenger levels with the associated
capacity constraints. The partnership with easyJet has seen the
schedule grow from three to eight destinations, with increasing
frequency and strong load factors being experienced, resulting in a
17.8% increase in passengers on the same period last year. This has
encouraged easyJet to add additional routes with Alicante,
Amsterdam, Geneva, Paris and most recently Grenoble to operate
through the winter this year. Against this positive backdrop,
discussions continue on an expanded summer schedule for 2024 with a
number of airlines who recognise the growing capacity constraints
at other London airports and the strong offering from LSA in terms
of operating cost and passenger experience.
The Board believes it now has a base from which to progress the
process to seek a new owner for LSA, with a view to crystallising
shareholder value through securing the right long-term partner, who
both recognises the inherent strategic opportunity and is best
placed to support future growth. The Board recognises that this
process may take time to get the right deal and, as disclosed in
the recent circular, are taking steps to further secure the Group's
financial position to support the airport so that the Group can
execute a sale of LSA without undue balance sheet pressure. As part
of this work, the Board has received a term sheet and has entered
into negotiations with a large majority holder of the exchangeable
bond, which currently matures in May 2024, with a view to agreeing
terms and an extension on the maturity to December 2025, along with
removing the cash drag from interest payments at 2.75%, to be
replaced with 10% PIK payable on redemption. These steps are being
taken to ensure that the maturity profile of the Group funding
matches and supports the sale process, allowing it to be conducted
in an orderly manner to maximise the value realised for
shareholders.
As disclosed on 26 September 2023, Esken received notification
that documents filed by Carlyle Global Infrastructure Opportunity
Fund (CGI) in the High Court had been served on LSA claiming
certain technical breaches by LSA with respect to the Convertible
Debt Facility. LSA does not agree with CGI's claimed interpretation
and intends to defend the action vigorously. Meanwhile, Esken
intends to continue with its sale process, as a successful sale and
application of the proceeds to redeem the Convertible Debt Facility
would in any case resolve the matter.
Since the period end, Esken has entered into non-binding heads
of agreement for the sale of two of the non-core assets for a cash
consideration of GBP8.5m. In addition, discussions are underway on
the remaining non-core assets at Widnes and Carlisle Lake District
Airport, with a view to completing transactions to dispose of these
assets before the end of our financial year. These transactions
will not only generate cash to improve the Groups liquidity profile
and support the wind down of the Group services, but also remove
long-term lease liabilities from the balance sheet and allow a
focus to be on the growth and sale of LSA. It is the intention of
the Board that once these transactions have been completed the
residual value will be returned to shareholders."
Financial highlights during the period
-- Group Adjusted EBITDA improved by 14.5% to a loss of GBP3.5m
(2022: GBP4.1m). Note that Renewables is now presented within
discontinued operations and that the comparator period is
consequently restated.
-- The aviation business reported an Adjusted EBITDA loss of
GBP2.8m (2022: GBP0.5m). Passenger numbers improved by 17.8% to
71,557 (2022: 60,734) reflecting continued easyJet operations,
following increased flight frequency and increased destinations.
The prior period benefitted from a logistics contract which has
terminated and one-off items.
-- Star Handling Limited was sold for GBP3.9m, generating a
GBP1.6m profit on disposal, with a further contingent consideration
of up to GBP1.0m dependent upon revenue performance over the 12
months post sale.
-- Propius handed back three aircraft in the period, leaving one
aircraft still to return along with the overhaul of one landing
gear set still outstanding. The maintenance reserve provision
remains sufficient to settle all outstanding obligations and will
be fully utilised in the second half of the year.
-- The Group disposed of its investment in Mersey Bioenergy
(MBE) for proceeds of GBP9.0m, generating a profit on disposal of
GBP1.7m, following a write back of impairment of GBP7.3m at 28
February 2023.
-- The Group has recalculated the amortised cost of the
convertible debt liability leading to a one-off non-cash adjustment
of GBP29.4m through finance costs in the profit or loss, driven by
a change in estimated repayment date resulting from the decision to
sell LSA.
-- An impairment of GBP5.3m has been recognised on the non-core
asset at Pollington, having accepted a non-binding proposal to
dispose of the asset for GBP3.5m.
-- The Group's cash at the period end was GBP26.9m (Feb 2023:
GBP50.3m), which includes GBP3.0m (Feb 2023: GBP5.3m) of
ring-fenced cash in LSA and GBP6.9m in Renewables, presented as
held for sale.
-- Renewables contributed GBP5.0m (2022: GBP7.0m) of EBITDA now
presented within discontinued operations. Performance was impacted
by increased plant outages, lower gate fee rates and impacts of
one-off settlements that have been agreed with specific plants in
relation to contractual negotiations done in parallel with
discussions to seek change of control consents in relation to the
disposal process.
Financial highlights post period end
-- Post period end, the Group agreed the disposal of Renewables
for net proceeds of GBP78.5m. Completion is expected on or around 1
December 2023.
-- On completion, the Group will repay its term loan of c.GBP71m
(including costs), removing security over the remaining non-core
assets.
-- Following completion, the Group will make a one-off
contribution of c.GBP3.6m into escrow for the benefit of the Ansa
Logistics Pension Plan. This payment is expected to be sufficient
to take the scheme through buy-in, buy-out and wind up removing any
further liability for the Group.
-- Residual cash from the disposal of Renewables will provide
working capital in the short term for the continuing Group.
-- As previously disclosed, the Group has initiated discussions
in relation to a GBP20m funding facility from Esken's larger
shareholders into Esken Aviation, as holding company of LSA, of
which an initial GBP5m has been committed plus indicative
commitments for a further GBP7m. These discussions will be
progressed following the settlement of the existing debt facilities
when the Renewables transaction completes.
Strategic review and outlook
Following the disposal of Esken Renewables, the continuing Group
will comprise of Esken Aviation, principally LSA, and non-core
operating divisions.
The strategy of the continuing Group will be to:
-- provide support for the ongoing recovery of passenger growth
at LSA, whilst continuing the managed sale process to secure a new
long term strategic owner for the airport;
-- dispose of the remaining non-core assets;
-- renegotiate the terms and maturity of the exchangeable bond
beyond the current maturity date of 8 May 2024, and to subsequently
repay and close out the exchangeable bond when it then becomes
due;
-- to settle all remaining outstanding liabilities;
-- once sufficient assets have been realised, to seek a managed
sale process of any of the remaining assets of the Group and return
remaining value to shareholders; and
-- implement the move to a Standard Listing on 22 December 2023.
Enquiries:
Esken Limited C/o Teneo
Teneo
Olivia Peters / Giles Kernick
020 7353 4200
esken@teneo.com
Publication on website
A copy of this announcement and associated presentation will be
available for inspection on the Company's website at:
www.esken.com. For the avoidance of doubt, the contents of this
website are not incorporated into and do not form part of this
announcement.
Financial Review
Summary of the period
In the Aviation division, passenger numbers in the period
increased by 17.8% to 71,557, up from 60,734 in the prior period.
During the summer 2023 season there was a 30% increase in the
number of flights operated by easyJet out of LSA due to the new
Amsterdam route in addition to increased frequency of flights to
Faro. At LSA the increased number of flights and destinations has
driven the period-on-period increase in passenger numbers.
During the period, the Group sold its wholly owned subsidiary
Star Handling Limited, which provided ground handling services at
Manchester and Stansted airports, to Skytanking UK Ltd for cash
consideration of GBP3.9m generating a profit on disposal of
GBP1.6m. There is further contingent consideration of up to GBP1.0m
dependent on revenue performance over the 12 months post sale, for
which there is no provision in the accounts. The remaining ground
handling operation will provide dedicated in-house services at
LSA.
During the period, the Renewables division was reclassified as a
disposal group held for sale and its results are presented within
discontinued operations on the Condensed Consolidated Income
Statement. Continuing challenging market conditions have had an
adverse effect on gate fee income, which has also been impacted due
to unplanned plant shutdowns reducing the amount of waste wood that
can be taken in by processing sites. Despite this, the division
contributed a GBP0.7m profit before tax (2022: GBP2.3m).
The Group disposed of its investment in MBE for cash
consideration of GBP9.0m, resulting in a profit on disposal of
GBP1.7m. The Group's investment comprised a 39.6% shareholding and
GBP7.3m of loan notes. Impairment of the loan notes was previously
reversed from GBPnil to GBP7.3m in the year ended 28 February
2023.
At 31 August 2023, the Group has GBP4.7m of obligations relating
to leases, maintenance and other costs of the ATR aircraft in
Propius. At the period end, there was one remaining aircraft to be
returned to the lessor and obligations on a further set of landing
gear. All costs are expected to be settled before the year ending
29 February 2024.
The Group's headroom at 31 August 2023 is GBP26.9m (see note
16), which includes GBP20.0m of cash in the continuing Group, of
which GBP3.0m is ring-fenced within LSA, and GBP6.9m of cash and
restricted cash in the Renewables division, shown as part of assets
held for sale on the Condensed Consolidated Statement of Financial
Position. The Group has remaining non-core assets with book value
of GBP30.3m.
The sale of Esken Renewables Limited has progressed
significantly and is expected to complete on or around 1 December
2023 for net consideration of c.GBP78.5m, which will allow the
Group to immediately repay the GBP55m term loan and associated
costs which total c.GBP71m. The balance of the net proceeds will be
used to further contribute GBP3.6m to the Group's defined benefit
pension scheme and to provide additional working capital in the
short term for the continuing Group.
Revenue
Revenue from continuing operations has decreased by 37.4% to
GBP9.1m (2022: GBP14.6m) in the six months to 31 August 2023. This
is due to the Aviation division, with the cargo operations from a
global logistics partner ending in mid-September 2022, and only
three months of revenue in the period for Star Handling Limited,
following the sale of this business. There was also a
period-on-period reduction in fuel sales at LSA due to a reduction
in the global fuel price.
Profitability
Divisional Continuing Profit Summary Restated
Six months Six months
ended ended
31 August 31 August
2023 2022
GBPm GBPm
----------- ------------
Aviation (2.8) (0.5)
Investments - -
Non-Strategic Infrastructure 2.0 (0.4)
Group central and eliminations (2.7) (3.2)
----------- ------------
Adjusted EBITDA (3.5) (4.1)
Depreciation (4.9) (5.2)
Impairment (5.3) -
Finance costs (net) (46.8) (5.4)
Share of post-tax losses of associates
and joint ventures (0.3) (0.3)
----------- ------------
Loss before tax (60.8) (15.0)
Tax 0.4 2.5
----------- ------------
Loss for the period from continuing
operations (60.4) (12.5)
----------- ------------
Profit from discontinued operations,
net of tax 0.1 3.9
----------- ------------
Loss for the period (60.3) (8.6)
----------- ------------
The 31 August 2022 results have been restated where required due
to IFRS 5 Discontinued Operations. Refer to note 6 for more
details.
EBITDA has improved by 14.5% to a loss of GBP3.5m (2022:
GBP4.1m). In Aviation, EBITDA has decreased to a loss of GBP2.8m
(2022: GBP0.5m). This is due to cargo operations from a global
logistics partner ending in mid-September 2022, a GBP1.4m recovery
of airline marketing costs in the prior period not being repeated,
and increases in legal and staff costs. These decreases were
partially offset by the GBP1.6m profit on disposal of Star Handling
Limited. The Non-Strategic Infrastructure EBITDA improved from a
loss of GBP0.4m to a profit of GBP2.0m in the period, due to the
GBP1.7m profit on disposal of MBE and a reduction in the Widnes
Regional Development Fund grant liability.
The loss before tax from continuing operations is GBP60.8m
(2022: GBP15.0m). Land and buildings at Pollington were impaired by
GBP5.3m following the decision to dispose of the site. Net finance
costs of GBP46.8m (2022: GBP5.4m) have increased principally due to
additional non-cash interest on the convertible debt due to a
re-assessment of the expected repayment date of the loan (see note
7), in addition to foreign exchange losses from the revaluation of
Esken Limited's US-Dollar denominated loan with Propius.
A summary of divisional profitability and further details of
divisional performance are set out in the Divisional Reviews
section.
Taxation
The tax credit of GBP0.4m (2022: GBP2.5m) has arisen
predominantly due to a change in the amount of unrecognised tax
losses following the disposal of Star Handling Limited in the
period.
Loss per share
Loss per share from continuing operations was 5.92p (2022:
1.23p) (see note 10 for further details).
Balance sheet
28 February
31 August 2023 2023
GBPm GBPm
--------------- ------------
Non-current assets 235.5 352.7
Current assets 162.1 86.2
Non-current liabilities (282.0) (272.7)
Current liabilities (134.9) (126.3)
Net (liabilities)/assets (19.3) 39.9
--------------- ------------
Non-current assets have decreased in the period, largely due to
the reclassification of goodwill and Property, Plant and Equipment
within the Renewables division to assets held for sale, presented
within current assets, in addition to impairment and depreciation
in the period. Current assets have increased primarily due to the
above reclassification of Renewables non-current assets, partly
offset by the decrease in cash balance in the period, see the Cash
flow section below for more detail.
There has been an increase in non-current liabilities driven by
an increase in the convertible debt due to a re-assessment of the
expected repayment date , partly offset by the reclassification of
non-current leases within the Renewables division to liabilities
held for sale, presented within current liabilities . Current
liabilities have increased due to the above Renewables division
reclassification, partially offset by repayment of the Propius
maintenance provision.
Debt and gearing
28 February
31 August 2023 2023
--------------- ------------
Loans and borrowings GBP327.7m GBP340.4m
Cash (GBP20.0m) (GBP50.3m)
Net debt GBP307.7m GBP290.1m
--------------- ------------
Adjusted EBITDA/interest (0.1) 0.2
Net debt/total assets 77.4% 66.1%
Gearing (1,591.1%) 726.8%
--------------- ------------
In the period, loans and borrowings have decreased by GBP12.7m,
the main drivers of which are as follows. Lease liabilities have
decreased by GBP56.5m due to the reclassification of leases in the
Renewables division to liabilities held for sale, in addition to
capital repayments across the Group. The convertible debt
instrument has increased by GBP38.4m due to a re-assessment of the
estimated repayment date, in light of the strategic review
triggering the managed disposal of LSA. Due to make-whole
provisions, the re-assessment of the expected repayment date does
not alter the expected cash repayment amount.
Cash flow
Restated
31 August
31 August 2023 2022
GBPm GBPm
--------------- -----------
Operating cash outflow (11.5) (12.6)
Investing activities 13.6 3.0
Financing activities (4.9) (3.8)
--------------- -----------
Decrease in the period (2.8) (13.4)
Discontinued operations (20.6) (7.4)
Cash at beginning of period 50.3 52.7
Cash at end of period 26.9 31.9
--------------- -----------
The cash outflow from discontinued operations has increased
period-on-period due to higher maintenance and lease costs in
Propius as aircraft are handed back in the current period. Costs
for Propius remain in line with expectations. Investing inflows
include GBP9.0m from the sale of MBE and GBP3.6m from the sale of
Star Handling. In the prior period they included GBP3.5m from the
sale of a portion of Widnes land. The principal financing outflows
include GBP4.2m of lease payments and GBP3.9m interest paid on the
term loan interest. There was an inflow of GBP4.0m from a further
drawdown on the term loan. In the prior period the main financing
outflow was from lease payments totalling GBP3.5m.
Key risks and uncertainties
As with any business, risk assessment and the implementation of
mitigating actions and controls are vital to successfully achieving
the Group's strategy. The Board has overall responsibility for risk
management and internal control within the context of achieving the
Group's objectives and has approved a Framework for the risk
management process. This includes regular consideration of both
existing and emerging risks, and the evaluation of the Group's
exposure to key corporate risks.
During the year, the Board has added one new principal risk,
relating to the Group's relationship with CGI, the issuer of the
convertible debt instrument. Other than that addition, the
principal risks set out in our statutory accounts for the year
ended 28 February 2023 are still applicable.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
-- The condensed set of unaudited financial statements has been
prepared in accordance with the UK-adopted International Accounting
Standard 34, 'Interim Financial Reporting'; and
-- The interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the statutory accounts for the year ended
28 February 2023 that could do so.
The above statement of Directors' responsibilities was approved
by the Board on
28 November 2023.
Nick Dilworth
Director
29 November 2023
Restated(1)
Six months Six months
ended 31 ended 31
August 2023 August 2022
Unaudited Unaudited
Continuing operations Notes GBP'000 GBP'000
Revenue 4 9,142 14,613
------------- -------------
Other operating income 5 3,322 89
Operating expenses (13,803) (18,805)
Restructuring costs 13 (2,171) -
------------- -------------
Adjusted EBITDA (3,510) (4,103)
Depreciation (4,965) (5,234)
Impairments 8 (5,270) -
Operating loss (13,745) (9,337)
Finance costs 7 (47,205) (10,557)
Finance income 7 413 5,220
Share of post-tax losses of associates
and joint ventures (286) (346)
------------- -------------
Loss before tax (60,823) (15,020)
Tax 9 391 2,511
------------- -------------
Loss for the period from continuing
operations (60,432) (12,509)
Discontinued operations
Profit from discontinued operations,
net of tax 6 177 3,891
------------- -------------
Loss for the period (60,255) (8,618)
------------- -------------
Loss per share expressed in pence per share - continuing operations
Basic 10 (5.92p) (1.23p)
Diluted 10 (5.92p) (1.23p)
Loss per share expressed in pence
per share - total
Basic 10 (5.90p) (0.84p)
Diluted 10 (5.90p) (0.84p)
Condensed Consolidated Income Statement
(1)The 2022 results have been restated where required due to
IFRS 5 Discontinued Operations. Refer to note 6 for further
details.
Condensed Consolidated Statement of Comprehensive Income
Six months Six months
ended 31 ended 31
August 2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Loss for the period (60,255) (8,618)
Discontinued operations, net of tax,
relating to exchange differences 3,318 (9,744)
Other comprehensive income/(expense)
- items that may be reclassified in
subsequent periods to profit or loss,
net of tax 3,318 (9,744)
------------- -------------
Re-measurement of defined benefit plan (663) 178
Change in fair value of financial assets
classified as FVOCI (1,283) (962)
Tax on items relating to components
of other comprehensive income/(expense) - (200)
Other comprehensive expense - items
that will not be reclassified to profit
or loss, net of tax (1,946) (984)
Other comprehensive income/(expense)
for the period, net of tax 1,372 (10,728)
------------- -------------
Total comprehensive expense for the
period (58,883) (19,346)
------------- -------------
Condensed Consolidated Statement of Financial Position
31 August 28 February
2023 2023
Unaudited Audited
Notes GBP'000 GBP'000
Non-current assets
Property, plant and equipment 11 203,146 263,412
Investment in associates and joint
ventures 163 450
Other financial assets 12 14,040 15,324
Intangible assets - 54,669
Net investment in lease 16,159 16,888
Defined benefit pension surplus 1,992 1,937
235,500 352,680
---------- ------------
Current assets
Inventories 1,125 1,729
Trade and other receivables 10,194 34,195
Restricted cash - 1,000
Cash and cash equivalents 12 19,958 49,264
Assets held for sale 6 130,824 -
162,101 86,188
---------- ------------
Total assets 397,601 438,868
---------- ------------
Non-current liabilities
Loans and borrowings 12 (264,707) (259,841)
Other liabilities (7,237) (8,894)
Deferred tax 9 (6,133) -
Provisions 13 (3,942) (3,942)
---------- ------------
(282,019) (272,677)
---------- ------------
Current liabilities
Trade and other payables (9,445) (27,611)
Loans and borrowings 12 (62,933) (80,521)
Corporation tax 9 (1,000) (583)
Provisions 13 (8,277) (17,560)
Liabilities associated with the
assets held for sale 6 (53,265) -
(134,920) (126,275)
---------- ------------
Total liabilities (416,939) (398,952)
---------- ------------
Net (liabilities)/assets (19,338) 39,916
---------- ------------
Capital and reserves
Issued share capital 102,534 102,534
Share premium 403,225 403,225
Foreign currency exchange reserve (3,481) (6,799)
Reserve for own shares held by employee
benefit trust (7,596) (7,596)
Retained deficit (514,020) (451,448)
---------- ------------
Shareholders' (deficit)/equity (19,338) 39,916
---------- ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 August 2023
Unaudited
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
2023 102,534 403,225 (6,799) (7,596) (451,448) 39,916
Loss for the period - - - - (60,255) (60,255)
Other comprehensive
income/(expense)
for the period - - 3,318 - (1,946) 1,372
--------- --------- ---------- --------- ---------- ---------
Total comprehensive
income/(expense)
for the period - - 3,318 - (62,201) (58,883)
--------- --------- ---------- --------- ---------- ---------
Employee benefit
trust - - - - (539) (539)
Share-based payment
charge - - - - 168 168
--------- --------- ---------- --------- ---------- ---------
Balance at 31 August
2023 102,534 403,225 (3,481) (7,596) (514,020) (19,338)
--------- --------- ---------- --------- ---------- ---------
For the six months ended 31 August 2022
Unaudited
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
2022 102,534 403,225 218 (7,596) (428,238) 70,143
Loss for the period - - - - (8,618) (8,618)
Other comprehensive
expense for the
period - - (9,744) - (984) (10,728)
--------- --------- ---------- --------- ---------- ---------
Total comprehensive
expense for the
period - - (9,744) - (9,602) (19,346)
--------- --------- ---------- --------- ---------- ---------
Share-based payment
charge - - - - 250 250
Balance at 31 August
2022 102,534 403,225 (9,526) (7,596) (437,590) 51,047
--------- --------- ---------- --------- ---------- ---------
Condensed Consolidated Statement of Cash Flows
Restated
Six months Six months
ended 31 August ended 31
2023 August 2022
Unaudited Unaudited
Notes GBP'000 GBP'000
Cash used in continuing operations 14 (10,991) (11,586)
Cash (outflow)/inflow from discontinued
operations (6,233) 3,802
Income taxes paid (526) (1,030)
----------------- -------------
Net cash flow from operating activities (17,750) (8,814)
----------------- -------------
Purchase of property, plant and equipment (85) (1,597)
Proceeds from the sale of property
inventory - 3,538
Proceeds from the sale of property,
plant and equipment 37 90
Receipt of capital element of net
investment in lease 854 676
Proceeds from disposal of subsidiary
undertaking, net of cash disposed 3,614 -
Proceeds from sale of associate 9,000 -
Interest received 211 323
Cash inflow from discontinued operations 4,859 1,307
----------------- -------------
Net cash flow from investing activities 18,490 4,337
----------------- -------------
Proceeds from new borrowings 4,010 -
Proceeds from grants - 670
Principal element of lease payments (3,176) (2,425)
Net repayment of revolving credit
facility (net of costs) - (50)
Interest paid (5,743) (1,967)
Cash outflow from discontinued operations (19,165) (12,558)
----------------- -------------
Net cash flow from financing activities (24,074) (16,330)
----------------- -------------
Decrease in cash and cash equivalents (23,334) (20,807)
Cash and cash equivalents at beginning
of period 49,264 52,738
Cash and cash equivalents at end
of period 25,930 31,931
Restricted cash
Restricted cash at beginning of period 1,000 -
----------------- -------------
Restricted cash at end of period 1,000 -
----------------- -------------
Cash and cash equivalents including
restricted cash at end of period 26,930 31,931
----------------- -------------
Included in cash and cash equivalents at end of period at 31
August 2023 is GBP5,972,000 classified as held for sale. The
restricted cash balance of GBP1,000,000 at 31 August 2023 is also
classified as held for sale. See note 6 for details on assets and
associated liabilities held for sale.
Notes to the Condensed Consolidated Financial Statements
1 Accounting policies
Corporate information
The Condensed Consolidated Financial Statements of the Group for
the six months ended 31 August 2023 (interim financial statements)
were authorised for issue in accordance with a resolution of the
Directors on 29 November 2023. Esken Limited is a Guernsey
registered company whose ordinary shares are publicly traded on the
London Stock Exchange. The principal activities of the Group are
described in note 3.
Basis of preparation
These condensed interim financial statements for the half year
ended 31 August 2023 have been prepared in accordance with the
UK-adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
They do not include all the information required for the full
annual financial statements and should be read in conjunction with
the financial statements of the Group as at and for the year ended
28 February 2023.
Except for the 28 February 2023 statutory comparatives, the
interim financial statements have not been audited or reviewed by
the Group's auditors, Mazars LLP.
The audited comparative financial information set out in these
interim financial statements does not constitute the Group's
statutory accounts for the year ended 28 February 2023, but has
been derived from those accounts. Statutory accounts for the year
ended 28 February 2023 have been published and Mazars LLP has
reported on those accounts. Their audit report was unqualified,
however, it highlighted a material uncertainty regarding going
concern in respect of sufficient liquidity for the Group's
requirements being dependent on the successful completion of the
proposed sale of the Group's renewables business by 31 December
2023, and the ability to raise an additional short-term facility of
up to GBP5.0m to provide liquidity for LSA prior to 31 July 2023.
The annual financial statements of the Group are prepared in
accordance with UK-adopted international accounting standards.
As presented in the Group's annual financial statements, all
percentage calculations are based on results rounded to the nearest
GBP1,000, being the presentation used across the primary statements
and accompanying notes.
Going concern
In adopting the going concern basis for preparing the interim
financial statements, the Directors have considered the business
activities including the Group's principal risks and uncertainties.
The Directors also considered the Group's current cash position,
the repayment profile of its existing debt structure and its
12-month cashflow forecasts. In addition, the resilience of the
Group has been assessed by applying significant downside scenarios
to the Group's cash flow projections.
However, the risks and uncertainties associated with the
achievement of forecasts and the availability of sufficient funding
indicate the existence of a material uncertainty related to events
or conditions that may cast significant doubt on the Group's
ability to continue as a going concern.
The sale of Esken Renewables Limited has progressed
significantly and still expected by the Directors of the Group to
complete on or around 1 December 2023. A material uncertainty
exists in relation to the settlement of the exchangeable bond due
in May 2024 being extended. The base case and significant downside
forecasts both include an amend and extend of the exchangeable
bond, extending the repayment to December 2025, or repayment will
be made the month after the LSA disposal, if earlier.
The significant downside scenario includes a 2-month delay to
the sale of LSA and the continuation of Group operations and costs
to the end of February 2025. Both scenarios leave the Group with
sufficient cash headroom to continue trading within the going
concern review period.
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 30 November 2024 and therefore have prepared the
interim financial statements on a going concern basis. However, as
previously noted this is highly dependent upon the exchangeable
bond amend and extend, which indicates 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 for the 6-month period ended 31 August 2023 do
not include any adjustments that would result from the basis of
preparation being inappropriate.
Significant accounting policies
The accounting policies applied in the preparation of the
interim financial statements are consistent with those followed in
the preparation of the Group's annual financial statements for the
year ended 28 February 2023. These accounting policies are expected
to be applied for the full year to 28 February 2024.
Key estimates and judgements
The estimates and judgements taken by the Directors in preparing
these interim financial statements are comparable with those
disclosed in the annual financial statements for the year ended 28
February 2023, with the exception of the IFRS 5 classification of
Esken Renewables as held for sale as all the criteria has now been
met in the current period.
Presentation of Condensed Consolidated Income Statement
Adjusted EBITDA, a non-GAAP measure, is the key profitability
measure used by management for performance review in the day-to-day
operations of the Group. Non-GAAP measures are used as they are
considered to be both useful and necessary. They are used for
internal performance analysis; 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.
In the current period the Renewables division has been reclassed
as a disposal group held for sale and a discontinued operation. The
post-tax results of discontinued operations are disclosed as a
single amount in the Condensed Consolidated Income Statement and
the prior period comparative results restated accordingly.
2 Seasonality of operations
There is a material effect of seasonality in the Aviation and
Renewables divisions. In the Aviation division there are higher
seasonal sales in summer, due to increased demand for overseas
travel, and there are higher seasonal sales in summer in the
Renewables division, due to higher gate fees.
3 Segmental information
The reporting segments are Aviation, Investments and
Non-Strategic Infrastructure. The results of Propius and the
Renewables division are presented as discontinued operations on the
face of the Condensed Consolidated Income Statement, see note
6.
The Aviation segment specialises in the operation of a
commercial airport and the provision of ground handling services.
The Investments segment holds non-controlling interests 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. No segmental assets or liabilities
information is disclosed because no such information is regularly
provided to, or reviewed by, the Chief Operating Decision
Maker.
Six months ended Non-Strategic Group central
31 August 2023 Aviation Investments Infrastructure and eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ ---------------- ------------------ ---------
Revenue
External 8,427 - 509 206 9,142
Internal 15 - 50 (65) -
--------- ------------ ---------------- ------------------ ---------
Statutory revenue 8,442 - 559 141 9,142
--------- ------------ ---------------- ------------------ ---------
Adjusted EBITDA (2,837) (34) 1,960 (2,599) (3,510)
Depreciation (4,530) - (194) (241) (4,965)
Impairments - - (5,270) - (5,270)
Net interest (39,063) (842) 41 (6,928) (46,792)
Share of post-tax
losses of associates
and joint ventures - (286) - - (286)
--------- ------------ ---------------- ------------------ ---------
Loss before tax (46,430) (1,162) (3,463) (9,768) (60,823)
--------- ------------ ---------------- ------------------ ---------
Restated
Six months ended Non-Strategic Group central
31 August 2022 Aviation Investments Infrastructure and eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ ---------------- ------------------ ---------
Revenue
External 14,150 - 302 161 14,613
Internal - - 50 (50) -
--------- ------------ ---------------- ------------------ ---------
Statutory revenue 14,150 - 352 111 14,613
--------- ------------ ---------------- ------------------ ---------
Adjusted EBITDA (518) (34) (402) (3,149) (4,103)
Depreciation (4,848) - (192) (194) (5,234)
Net interest (7,080) (821) (12) 2,576 (5,337)
Share of post-tax
losses of associates
and joint ventures - (346) - - (346)
--------- ------------ ---------------- ------------------ ---------
Loss before tax (12,446) (1,201) (606) (767) (15,020)
--------- ------------ ---------------- ------------------ ---------
Internal revenue above relates to inter-segment revenues that
are eliminated within Group central and eliminations. Intra-segment
revenues are eliminated within each segment.
4 Revenue
Revenue is primarily from contracts with customers. Other
sources of revenue are from owned and leased fixed assets. The
following tables detail the split between revenue from contracts
with customers and other revenue, and the disaggregation of revenue
from contracts with customers.
Six months ended Non-Strategic Group central
31 August 2023 Aviation Investments Infrastructure and eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ ---------------- ------------------ --------
Revenue from contracts
with customers 8,427 - 321 24 8,772
Other revenue - lease
income - - 188 182 370
--------- ------------ ---------------- ------------------ --------
8,427 - 509 206 9,142
--------- ------------ ---------------- ------------------ --------
Six months ended Non-Strategic Group central
31 August 2023 Aviation Investments Infrastructure and eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ ---------------- ------------------ --------
Major product/service
line
Sale of goods 5,804 - 16 - 5,820
Rendering of services 2,623 - 305 24 2,952
8,427 - 321 24 8,772
--------- ------------ ---------------- ------------------ --------
Primary geographical
markets
United Kingdom 8,241 - 198 24 8,463
Europe and Ireland 177 - 123 - 300
Rest of world 9 - - - 9
--------- ------------ ---------------- ------------------ --------
8,427 - 321 24 8,772
--------- ------------ ---------------- ------------------ --------
Timing of revenue
recognition
Products and services
transferred at a
point in time 8,427 - 321 24 8,772
8,427 - 321 24 8,772
--------- ------------ ---------------- ------------------ --------
Restated
Six months ended Non-Strategic Group central
31 August 2022 Aviation Investments Infrastructure and eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ ---------------- ------------------ --------
Revenue from contracts
with customers 14,045 - 78 - 14,123
Other revenue - lease
income 105 - 224 161 490
--------- ------------ ---------------- ------------------ --------
14,150 - 302 161 14,613
--------- ------------ ---------------- ------------------ --------
Restated
Six months ended Non-Strategic Group central
31 August 2022 Aviation Investments Infrastructure and eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ ---------------- ------------------ --------
Major product/service
line
Sale of goods 2,944 - - - 2,944
Rendering of services 11,101 - 78 - 11,179
14,045 - 78 - 14,123
--------- ------------ ---------------- ------------------ --------
Primary geographical
markets
United Kingdom 13,385 - 78 - 13,463
Europe and Ireland 573 - - - 573
Rest of world 87 - - - 87
--------- ------------ ---------------- ------------------ --------
14,045 - 78 - 14,123
--------- ------------ ---------------- ------------------ --------
Timing of revenue
recognition
Products and services
transferred at a
point in time 14,045 - 78 - 14,123
14,045 - 78 - 14,123
--------- ------------ ---------------- ------------------ --------
Opening and closing receivables, contract assets and contract
liabilities from contracts with customers are as follows:
31 August 2023 28 February
2023
Unaudited Audited
GBP'000 GBP'000
Receivables 2,456 8,911
Contract assets - 3,327
--------------- ------------
Contract assets at 28 February 2023 relate to the Group's rights
to consideration for work completed but not billed in the
Renewables division. The balance is GBPnil at 31 August 2023 due to
the reclassification of the Renewables division balances to held
for sale.
5 Other income
Restated
Six months Six months
ended 31 August ended 31
2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Profit on disposal of subsidiary 1,597 -
Profit on disposal of associate 1,698 -
Profit on disposal of property, plant
and equipment 27 89
3,322 89
----------------- -------------
On 15 May 2023, the Group disposed of its wholly owned
subsidiary Star Handling Limited to Skytanking UK Ltd for cash
consideration of GBP3,874,000 and deferred contingent consideration
of GBP270,000. Net assets disposed of were GBP2,287,000 and there
were costs of disposal of GBP260,000, leading to a profit on
disposal of GBP1,597,000. Further contingent consideration,
dependent upon the business achieving forecast customer revenue
targets in the 12 months following completion, has not been
recognised.
On 3 August 2023, the Group disposed of its investment in Mersey
Bioenergy Holdings Limited and its wholly owned subsidiary to UK
Waste Resources and Energy Investments L.P. for cash consideration
of GBP9,000,000. The Group's investment comprised a 39.6%
shareholding and GBP7,302,000 of loan notes. The disposal generated
a profit on disposal of GBP1,698,000.
6 Discontinued operations and disposal group held for sale
Renewables
The results of the Renewables division are reported as part of
the single line loss from discontinued operations, net of tax on
the face of the Condensed Consolidated Income Statement. The prior
year results have been restated on the same basis. The assets and
liabilities of Renewables have been reclassed as a disposal group
held for sale.
A summary of the Renewables results included in discontinued
operations is as follows:
Six months Six months
ended 31 August ended 31
2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Revenue 48,883 43,534
Other income 358 466
Operating expenses (44,272) (37,050)
Depreciation (3,406) (3,879)
Net finance costs (898) (776)
----------------- -------------
Profit before tax 665 2,295
Tax - -
----------------- -------------
Profit for the period from discontinued
operations, net of tax 665 2,295
----------------- -------------
The above profit from discontinued operations of GBP665,000
(2022: GBP2,295,000) is attributable to the owners of the
Company.
The Renewables division disposal group comprises the following
assets and liabilities:
31 August
2023
Unaudited
GBP'000
Goodwill 54,669
Property, plant and equipment 44,776
Inventory and work in Progress 725
Trade and other receivables 17,062
Deferred tax 6,133
Corporation tax 487
Cash 6,972
-----------
Assets held for sale 130,824
-----------
Lease obligations 35,896
Trade and other payables 17,369
-----------
Liabilities held for sale 53,265
-----------
The cash flows in relation to this operation are as follows:
Six months Six months
ended 31 August ended 31
2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Net cash generated from operating activities 3,425 5,559
Net cash generated from investing activities 1,762 1,307
Net cash used in financing activities (6,481) (6,270)
Net cash (outflow)/inflow for the
period (1,294) 596
----------------- -------------
Propius
Propius is abandoned in line with the IFRS 5 definition of a
discontinued operation. The results of Propius are reported on a
single line, net of tax on the face of the Condensed Consolidated
Income Statement.
While the ongoing finance charges and cashflows in respect of
aircraft leases and cashflows in respect of maintenance obligations
of Propius are presented within discontinued operations in the
Condensed Consolidated Income Statement, the corresponding
liabilities are not presented within held for sale and remain on
the Group's Condensed Consolidated Statement of Financial
Position.
A summary of the Propius results included in discontinued
operations is as follows:
Six months Six months
ended 31 August ended 31
2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Net operating income 447 2,670
Net finance costs (935) (1,074)
----------------- -------------
(Loss)/profit before tax (488) 1,596
Tax - -
----------------- -------------
(Loss)/profit for the period from
discontinued operations, net of tax (488) 1,596
----------------- -------------
The cash flows in relation to Propius are as follows:
Six months Six months
ended 31 August ended 31
2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Net cash used in operating activities (9,658) (1,757)
Net cash generated from investing activities 3,097 -
Net cash used in financing activities (12,684) (6,288)
Net cash outflows for the period (19,245) (8,045)
----------------- -------------
7 Finance costs and income
Restated
Six months Six months
ended 31 ended 31
August 2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Finance charges payable under leases 1,278 1,067
Convertible debt interest 38,372 7,591
Exchangeable bond interest 906 918
Term loan interest 4,685 -
Revolving credit facility interest - 981
Foreign exchange losses 1,964 -
Total finance costs 47,205 10,557
------------- -------------
Six months Six months
ended 31 ended 31
August 2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Interest received from net investment
in lease 335 321
Interest received on defined benefit
pension scheme 78 8
Foreign exchange gains - 3,848
Revaluation of convertible debt derivative - 1,043
Total finance income 413 5,220
------------- -------------
It was originally estimated that repayment date of the
convertible debt would be during the year ended 28 February 2026.
During the period, the Group re-assessed the repayment date and
estimated that it is now going to be during the year ended 29
February 2024, in light of the strategic review triggering the
managed sale of LSA. Due to make-whole provisions the re-assessment
of the expected repayment date does not alter the expected cash
repayment amount. This has driven an increased one-off non-cash
interest charge in the period and is the main reason for the
period-on-period increase in interest on the convertible debt.
The increase in foreign exchange losses, and decrease in foreign
exchange gains, is due to adverse fluctuations in US Dollar and
exchange rates impacting the Group's foreign currency denominated
loan with Propius.
8 Impairment
During the six months ended 31 August 2023 land and buildings at
Pollington were impaired by GBP5,270,000 following the decision to
dispose of the site.
9 Taxation
Taxation on profit on ordinary activities
Restated
Six months Six months
ended 31 ended 31
August 2023 August 2022
Total tax in the Condensed Consolidated Unaudited Unaudited
Income Statement from continuing and
discontinued operations
GBP'000 GBP'000
Corporation tax:
Current year corporation tax - 1,000
Adjustments in respect of prior years - (3,311)
Total corporation tax - (2,311)
------------- -------------
Deferred tax:
Origination and reversal of temporary
differences (391) (152)
Impact of change in rate - (48)
Total deferred tax (391) (200)
------------- -------------
Total credit in the Condensed Consolidated
Income Statement (391) (2,511)
------------- -------------
Split between:
Continuing (391) (2,511)
Discontinued - -
------------- -------------
Included in the above tax charges are total current tax credit
on continuing operations of GBPnil (2022: GBP2,311,000) and a total
deferred tax credit on continuing operations of GBP391,000 (2022:
GBP200,000) giving a total tax credit on continuing operations in
the Condensed Consolidated Income Statement of GBP391,000 (2022:
GBP2,511,000). The total tax credit on continuing and discontinued
operations in the Condensed Consolidated Income Statement is
GBP391,000 (2022: GBP2,511,000).
An increase in the main rate of corporation tax 25% effective
from 1 April 2023 was substantively enacted as at the balance sheet
date 31 August 2022. As such, the deferred tax assets/liabilities
as at 31 August 2022 have been recognised/provided at 25%.
The total net deferred tax for the consolidated Group is GBPnil
at 31 August 2023, with a GBP6.3m liability presented as deferred
tax on the face of the Condensed Consolidation Statement of
Financial Position and a GBP6.3m asset presented within assets held
for sale, relating to the Renewables division.
10 Loss per share
The following table reflects the income and share data used in
the basic and diluted earnings per share calculations:
Restated
Six months Six months
ended 31 ended 31
August 2023 August 2022
Unaudited Unaudited
Numerator GBP'000 GBP'000
Continuing operations
Loss for the period used for basic and
diluted earnings (60,432) (12,509)
Discontinued operations
Profit for the period used for basic
and diluted earnings 177 3,891
Total
Loss for the period used for basic and
diluted earnings (60,255) (8,618)
------------- -------------
Denominator Number Number
Weighted average number of shares used
in basic and diluted EPS 1,020,735,977 1,020,735,977
Own shares held and therefore excluded
from weighted average number 4,600,764 4,600,764
11 Property, plant and equipment
Additions and disposals
During the six months ended 31 August 2023, the Group acquired
or developed property, plant and equipment (PPE) assets with a cost
of GBP1,049,000 (2022: GBP3,725,000). This mainly consisted of
plant and machinery equipment in the Renewables division.
PPE assets with a book value of GBP728,000 (2022: GBP617,000)
were disposed of by the Group during the six months ended 31 August
2023, resulting in a profit on disposal of GBP376,000 (2022:
GBP430,000), of which GBP350,000 is presented within discontinued
operations.
PPE in the Renewables division, with a net book value of
GBP44,776,000, was reclassified to assets held for sale. Land and
buildings at Pollington were impaired by GBP5,270,000 following the
decision to dispose of the site. The sale of Star Handling Limited
led to the disposal of PPE with net book value of GBP1,798,000.
12 Financial assets and liabilities
31 August 28 February
2023 2023
Unaudited Audited
Loans and borrowings GBP'000 GBP'000
Non-current
Convertible debt 171,349 132,977
Term loan 46,212 43,969
Obligations under leases 47,146 82,895
---------- ------------
264,707 259,841
Current
Exchangeable bonds 53,300 52,637
Term loan 3,750 1,250
Obligations under leases 5,883 26,634
---------- ------------
62,933 80,521
Total loans and borrowings 327,640 340,362
---------- ------------
Cash (19,958) (49,264)
Restricted cash - (1,000)
---------- ------------
Net debt 307,682 290,098
---------- ------------
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 or a security deposit.
The exchangeable bonds have a May 2024 maturity date, with
repayment being the difference between the GBP53.3m gross bonds and
the value of shares held in LDG plc into which the bonds are
convertible. At 31 August 2023, the difference amounted to
GBP44.4m.
There has been an increase in the convertible debt liability due
to a re-assessment of the estimated repayment date, see note 7.
A reconciliation of movements of liabilities to cash flows
arising from financing is as follows:
Exchangeable Convertible Obligations
bond debt Term loan under leases Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------ ---------- -------------- ---------
Balance at 1 March
2023 52,637 132,977 45,219 109,529 340,362
Changes from financing
cash flows:
Additional loans - - 5,000 - 5,000
Cash outflow from debt
issue costs - - (990) - (990)
Principal elements of
lease payments - continuing
operations (3,176) (3,176)
Principal elements of
lease payments - discontinued
operations (17,922) (17,922)
Interest paid - continuing
operations (730) - (3,952) (1,061) (5,743)
Interest paid - discontinued
operations - - - (1,243) (1,243)
------------- ------------ ---------- -------------- ---------
Total changes from
financing cash flows (730) - 58 (23,402) (24,074)
New leases entered into - - - 1,279 1,279
Reclassification to
held for sale - - - (35,896) (35,896)
Disposal of subsidiary
undertaking - - - (553) (553)
The effect of changes
in foreign exchange
rates - - - (449) (449)
Non-cash amortisation
of loan and accrual
of interest 1,393 38,372 4,685 2,521 46,971
------------- ------------ ---------- -------------- ---------
Balance at 31 August
2023 53,300 171,349 49,962 53,029 327,640
------------- ------------ ---------- -------------- ---------
Exchangeable Convertible Revolving Obligations
bond debt credit facility under leases Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------ ----------------- -------------- ---------
Balance at 1 March
2022 52,385 118,862 - 123,391 294,638
Changes from financing
cash flows:
Cash outflow from debt
issue costs - - (50) - (50)
Principal elements of
lease payments - continuing
operations (Restated) - - - (2,425) (2,425)
Principal elements of
lease payments - discontinued
operations (Restated) - - - (10,611) (10,611)
Interest paid - continuing
operations (Restated) (730) - (179) (1,058) (1,967)
Interest paid - discontinued
operations (Restated) - - - (1,947) (1,947)
------------- ------------ ----------------- -------------- ---------
Total changes from
financing cash flows (730) - (229) (16,041) (17,000)
New leases entered into - - - 3,395 3,395
Termination of lease - - - (11) (11)
The effect of changes
in foreign exchange
rates - - - 3,780 3,780
Revaluation of derivative - (1,043) - - (1,043)
Non-cash amortisation
of loan and accrual
of interest 918 7,592 229 2991 11,730
------------- ------------ ----------------- -------------- ---------
Balance at 31 August
2022 52,573 125,411 - 117,505 295,489
------------- ------------ ----------------- -------------- ---------
The book value and fair values of financial assets and financial
liabilities are as follows:
Book Value Fair Value
31 August 31 August
2023 2023
Unaudited Unaudited
GBP'000 GBP'000
Financial assets
Other investments 14,040 14,040
Financial liabilities
Exchangeable bonds - host element 53,300 48,436
Convertible debt - host element 171,304 85,213
Embedded derivatives 45 45
Book Value Fair Value
28 February 28 February
2023 2023
Audited Audited
GBP'000 GBP'000
Financial assets
Other investments 15,324 15,324
Financial liabilities
Exchangeable bonds - host element 52,637 42,413
Convertible debt - host element 132,932 85,213
Embedded derivatives 45 45
The Directors reasonably consider the fair value of other
financial assets and liabilities (such as trade and other
receivables, trade and other payables, and lease liabilities)
approximate their book value.
Fair Value Hierarchy
The fair value hierarchy is explained in the statutory accounts
for the year ended 28 February 2023. The fair values in the table
below reflect financial assets and liabilities measured at fair
value in Condensed Consolidated Statement of Financial
Position.
As at 31 August Total Level 1 Level 2 Level 3
2023
Unaudited GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------
Financial assets
Other financial
assets 14,040 8,884 5,156 -
Financial liabilities
Other financial
liabilities 45 - - 45
As at 28 February Total Level 1 Level 2 Level 3
2023
Audited GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------
Financial assets
Other financial
assets 15,324 10,168 5,156 -
Financial liabilities
Other financial
liabilities 45 - - 45
Level 1 other financial assets relates to the Group's investment
in LDG plc. The GBP5,156,000 other financial assets presented
within level 2 at 31 August 2023 has been fair valued by reference
to cash held within the bank account of the captive insurance
cell.
The other financial liabilities are recognised within the
convertible debt and exchangeable bonds within loans and borrowings
on the face of the Condensed Consolidated Statement of Financial
Position.
There were no transfers between Levels 1, 2 and 3 fair value
measurements.
13 Provisions
Onerous Litigation Remediation Maintenance
contracts and claims provision Restructuring reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------ ------------ -------------- ------------ ---------
At 1 March
2023 875 1,573 3,942 - 15,112 21,502
Provisions used (422) (656) - - (9,117) (10,195)
Provisions made 15 14 - 2,171 - 2,200
Provisions reversed - (26) - - (683) (709)
Currency retranslation - - - - (579) (579)
At 31 August
2023 468 905 3,942 2,171 4,733 12,219
----------- ------------ ------------ -------------- ------------ ---------
Analysis of
provisions
Current 468 905 - 2,171 4,733 8,277
Non-current - - 3,942 - - 3,942
During the period GBP656,000 was paid to settle part 1 claims
relating to LSA.
The Group made payments totalling GBP9,117,000 for required
maintenance on the remaining four ATR aircraft leased by Propius.
The required maintenance provision was recalculated as at 31 August
2023, based on the latest estimates and assumptions, which led to a
release of provision of GBP683,000. Fluctuations in the exchange
rate between the US Dollar and GB Pound led to a GBP579,000
decrease in maintenance reserves.
A restructuring provision of GBP2,171,000 was made to cover
employee exit costs as part of the Group restructure. The exit cost
provision is expected to be utilised in phases and within 12 months
of the balance sheet date.
14 Cash used in continuing operations
Restated
Six months Six months
ended 31 ended 31
August 2023 August 2022
Unaudited Unaudited
GBP'000 GBP'000
Loss before tax (60,823) (15,020)
Adjustments to reconcile loss before
tax to net cash flows:
Realised profit on sale of property,
plant and equipment (27) (89)
Profit on disposal of subsidiary undertaking (1,597) -
Profit on disposal of associate (1,698) -
Share of post-tax losses of associate
accounted for using the equity method 286 346
Depreciation of property, plant and
equipment 4,965 5,234
Finance income (413) (1,364)
Finance costs 45,241 10,549
Release of grant income (876) (772)
Impairment 5,270 -
Charge for share-based payments 167 250
Foreign exchange retranslation 1,959 (3,843)
Working capital adjustments:
Decrease/(increase) in inventories 3 (43)
Increase in trade and other receivables (2,874) (3,122)
Decrease in trade and other payables (1,437) (1,468)
Increase/(decrease) in retirement benefits
and other provisions 863 (2,244)
Cash used in continuing operations (10,991) (11,586)
------------- -------------
15 Related parties
On 3 August 2023 the Group disposed of its investment in Mersey
Bioenergy Holdings Limited (MBHL), at which point it ceased to be a
related party. During the period up to 3 August 2023, the Group
made sales of GBP3,669,000 (2022: GBP2,928,000) to its former
associate Mersey Bioenergy Limited, a subsidiary of MBHL, relating
to the sale of biomass material. At 31 August 2023, GBP563,000 (28
February 2023: GBP549,000) of the sales, made during the time MBHL
was a related party, was owed to the Group.
16 Glossary - Alternative performance measures (APMs)
In the reporting of financial information, the Directors have
adopted various 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 note 3 for reconciliation to
statutory loss before tax.
Net debt
Net debt is defined as the sum of obligations under leases, term
loan, exchangeable bonds and convertible debt, less cash and cash
equivalents. See note 12 for reconciliations of this measure.
Gearing
Gearing is defined as net debt, as defined above, divided by
Group shareholders' equity per the Condensed Consolidated Statement
of Financial Position.
Headroom
Headroom is the sum of cash per the Condensed Consolidated
Statement of Financial Position of GBP19,958,000, plus GBP5,972,000
of cash and GBP1,000,000 of restricted cash in the Renewables
division, which is presented within assets held for sale.
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