REG - Esken Limited - Trading Statement

EskenAnnouncement

31/08/2022 07:00

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RNS Number : 6711X  Esken Limited  31 August 2022

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by
virtue of the European Union (Withdrawal) Act 2018.

 

31 August 2022

ESKEN LIMITED

('Esken' or 'the Group')

 

Trading Statement

 

Esken, the aviation and renewables group, issues the following update on
trading ahead of the publication of its half year results for the six months
to 31 August 2022, which will be announced in November.

 

Aviation

London Southend Airport (LSA) has been informed by its global logistics
partner that it will cease to use cargo operations at LSA, effective
mid-September. LSA has been one of its global logistics customer's best
performing aviation hubs. However, the operation has over time reduced from an
original 18 flights per week to 7 since October 2021 and the global logistics
partner has now advised LSA that it will cease operations in line with a
change of strategic focus from air freight to road-based cargo. This decision
is one of several long-term changes to its logistics network throughout the UK
designed to fulfil more customer demand locally.

 

Esken anticipates that the impact on EBITDA for the remainder of FY23 will be
in the order of c.£0.9m before exit fees receivable by Esken. There are exit
fee provisions within the contract and the logistics customer will also pay
fees related to its 60-day notice period. The FY24 impact on Esken's Aviation
business is expected to be a c.£2.9m reduction in EBITDA, prior to any
additional cost savings and/or new cargo agreements. The management team has
been in discussions with other logistics businesses over the last twelve
months to highlight the benefits of the operation at LSA.

 

LSA employs 12 people within the cargo operation and Star Handling, formerly
Stobart Aviation Services, employs 60 people in service of the global
logistics partner contract. Esken will explore opportunities to transfer a
number of these people to other roles within the Aviation business.

 

The summer saw the return of passenger flying at LSA with ten flights a week
currently being operated by easyJet serving Malaga, Palma and Faro. In
addition, as a result of the widely reported disruption in the aviation sector
with constraints at other airports, LSA was able to utilise its spare capacity
to welcome flights from Blue Air, Sky Express, and Wideroe. LSA continues to
have positive dialogue with a range of carriers in relation to summer 2023
schedules.

 

Esken recently appointed a new Chief Executive to LSA, John Upton, who will
join the business on 12 September 2022 to lead the development of the airport.

 

LSA remains well positioned for the recovery and longer-term growth in
commercial passenger flying. As volumes continue to build and more established
London airports begin to face capacity constraints once again, LSA's proximity
to London, strong transport links and enjoyable passenger experience support
positive growth prospects.

 

Renewables

Esken Renewables continues to perform well despite the widely reported
slowdown in the construction sector over the summer as a result of rising
input costs and ongoing supply chain issues. The long-term supply contracts to
energy generators which all have elements of automatic RPI related annual cost
increase continue to be implemented in line with their annual review dates,
helping to mitigate input cost pressures in the business.

 

As a result, the division remains on track to achieve EBITDA in FY23 in excess
of £22m.

 

Non-core assets and legacy matters

Esken also announces that, in line with its strategy to dispose of its
non-core assets, it has concluded the sale of a further part of the site at
Widnes generating cash proceeds of £3.5m, in line with the current net book
value.

 

Esken has also entered into an agreement for the early return to the lessor of
two of the aircraft leased by Propius. The first of these aircraft has been
delivered already with the second due to be handed over by mid-September
subject only to final aircraft inspection on the date of handover. This
arrangement will lead to a net cash benefit of c.£2m compared to the original
terms.

 

Funding and liquidity

Esken expects to have cash and undrawn facilities of c.£50m at close of 31
August 22, including c.£10m of ring-fenced facilities at LSA. Taking into
account the above developments, the Group's year end forecast headroom is
tracking broadly in line with management expectations set out at the time of
the refinancing. The business is in discussion with a number of debt providers
in relation to replacing the undrawn RCF facility of £20 million which
expires in February 2023 and to provide medium-term debt facilities to meet
the funding requirements of the Group. Esken intends that these discussions
will be concluded ahead of the interim results which are scheduled for early
November.

 

 

 Esken Limited                            C/O Tulchan Communications
 Charlie Geller, Communications Director

 Tulchan Communications                   +44 207 353 4200
 Olivia Peters / Lisa Jarrett-Kerr        esken@tulchangroup.com

 

 

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